EU vetos Deutsche Boerse-London Stock Exchange merger deal

Wed Mar 29, 2017 2:09pm EDT
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By Foo Yun Chee

BRUSSELS (Reuters) - An attempted merger between the German and British stock exchanges was struck down by European regulators on Wednesday, formally ending a deal that unraveled in the wake of Britain's vote to leave the European Union.

"We could not approve this merger on the terms ... proposed," said European Competition Commissioner Margrethe Vestager, blocking the 29 billion-euro ($31 billion) deal to combine Deutsche Boerse (DB1Gn.DE: Quote) and the London Stock Exchange (LSE.L: Quote).

A merger would have created Europe's biggest stock exchange. But the European Commission objected, saying the deal, which was the pair's fifth attempt to combine, would have resulted in a monopoly in the processing of bond trades.

Selling MTS, the LSE's Italian fixed income trading platform, would have removed the Commission's concerns but LSE declined to do so.

"How exactly these markets work and the products traded can seem like rocket science," said Vestager. "But actually our competition concerns with this merger are very simple."

"In some markets Deutsche Börse and London Stock Exchange both provide the same services. And in some of these markets they are essentially the only players and the merger would therefore have led to a de facto monopoly."

The EU rejection comes on the day the British government started proceedings for leaving the European Union, a move which industry sources have said undermined the merger plans.

The Brexit decision had prompted German politicians to demand that the headquarters of the exchange group move from London to Frankfurt, creating a conflict that caused the deal to unravel.   Continued...

European Competition Commissioner Margrethe Vestager holds a news conference after EU antitrust regulators blocked the proposed merger of Deutsche Boerse and the London Stock Exchange on Wednesday as expected, saying that the deal would have harmed competition because of the companies' combined market power, in Brussels, Belgium March 29, 2017.  REUTERS/Yves Herman