By Simon Miller
The European Commission has blocked a merger between Deutsche Börse and NYSE Euronext as it would have created a “quasi-monopoly" in exchange-traded European financial derivatives.
With the two exchanges controlling more than 90% of global trade in European derivatives, the EC decided that new competitors would be unlikely to enter the market successfully enough to pose credible competition.
Although the two companies offered to sell certain assets and to provide access to their clearinghouse for some categories of new contracts, it was thought that the commitments were “inadequate to solve the identified competition concerns”.
Commission Vice President in charge of competition policy Joaquín Almunia said: "The merger between Deutsche Börse and NYSE Euronext would have led to a near-monopoly in European financial derivatives worldwide. These markets are at the heart of the financial system and it is crucial for the whole European economy that they remain competitive. We tried to find a solution, but the remedies offered fell far short of resolving the concerns."
The judgement added: “With no effective competitive constraint left in the market, the benefits of price competition would be taken away from customers. There would also be less innovation in an area where a competitive market is vital for both SMEs and larger firms.”