The European Commission (Commission) has opened an in-depth Phase II investigation into the proposed merger between Deutsche Börse AG and NYSE Euronext Inc., both worldwide stock exchange groups.
The Commission’s initial market investigation showed that the proposed transaction would bring together the two largest derivatives exchanges in Europe, giving rise to significant competition concerns in the market for derivatives trading and clearing. Derivatives are financial contracts which are used for hedging and investment purposes which derive their value from assets and variables such as stock, interest rates or currencies. Concerns were also raised in respect of equities trading and settlement and index licensing.
During the Phase II investigation, the Commission will consider, amongst other things, whether the removal of an important competitor from the market would have a negative impact on innovation in derivatives products and technology solutions. It will also assess whether, in a market characterised by high barriers to entry, the transaction would result in increased difficulties for competitors entering the market without access to the merged entity’s enlarged post-trade clearing facilities, thereby reducing the possibilities for fee competition.
The Commission has set a provisional deadline of 13 December 2011 to deliver its final decision on the proposed merger.