The European Commission has cleared under the EU Merger Regulation the proposed creation of the joint venture Newedge between the French banks Société Générale S.A and Crédit Agricole Group. Newedge will offer brokerage services for listed derivatives (both execution and clearing), over-the-counter ("OTC") derivatives, listed securities, prime brokerage services, and other various ancillary services. The Commission concluded that the operation would not significantly impede effective competition in the European Economic Area (EEA) or in any substantial part of it.
Société Générale and Crédit Agricole both have significant activities in Europe. Through their respective subsidiaries, Calyon and Fimat, they are active in the intermediation of various financial and non-financial instruments, primarily derivatives instruments, but also listed equity, prime brokerage, and various ancillary services around the world.
The Commission's investigation focused on the markets of brokerage services for listed and OTC derivatives, since both companies contribute these businesses to Newedge.
The Commission's investigation indicated that Newedge would enjoy small market shares, well below 15%, regardless of whether the relevant markets were worldwide or EEA-wide. Given the significant presence of both parties in France, the Commission also examined the theoretical possibility that the relevant markets could be limited to France, or should be defined on the basis of a specific exchange (trading platform).
The market investigation confirmed that the geographic scope of the relevant markets was likely to be global for both listed and OTC products.
Given that Newedge would have a significant market share at the ICE Futures Europe Energy Exchange (UK), the Commission examined in particular the possible impact on competition for the services in question. The market investigation showed that no competition concerns would arise as a result of the proposed transaction given the presence of a large number of actual or potential competitors and low barriers to entry and expansion. The Commission also concluded that no competition concerns would arise for the French market. [20 December 2007]