EU regulators block giant financial exchange merger
Stock traders work at the Deutsche Boerse in the central German city of Frankfurt am Main after a press conference today. The EU Commission vetoed a transatlantic tie-up of the Frankfurt and New York stock exchanges, a decision slammed here as ‘out of touch with reality’ and marking a ‘dark day’ for Europe.
BRUSSELS, Belgium – The European Union flexed its anti-trust muscles Wednesday blocking a $10 billion merger between the NYSE Euronext and Germany’s Deutsche Boerse to prevent them gaining a “near monopoly” in European derivatives trading.
“These markets are at the heart of the financial system and it is crucial for the whole European economy that they remain competitive,” said Joaquin Almunia, the EU’s antitrust commissioner.
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The decision to bloc the planned creation of the world’s largest financial exchange operator came despite intense lobbying by the exchanges and opposition from some EU governments and even within the EU’s executive body.
“This is a black day for Europe and its future competitiveness on global financial markets,” the executive board of Deutsche Boerse said in a statement. “The EU Commission’s decision is based on an unrealistically narrow definition of the market that does no justice to the global nature of competition in the market for derivatives.”
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Michel Barnier, the EU’s influential financial services commissioner, had favored the merger, agreeing with arguments that it would created a powerful European champion in world exchange markets and boost overall European competitiveness. NYSE Euronext runs the New York Stock Exchange and several European exchanges.
Almunia rejected such arguments. Although the Deutsche Boerse was leading the merger, he questioned how the merged company could be a European champion when most of its shareholders and the CEO would not be Europeans. He also dismissed the argument from the companies that the global nature of the market and competition from the Chicago-based CME Group meant they would not have a monopoly.
“The merger would have eliminated healthy competition,” Almunia told a news conference in Brussels, arguing that the merged entity would have control of 90 percent of world market for European financial derivatives, while the Chicago-based exchange deals in US products.
US regulators had approved the merger in December, but the EU ruling effectively kills the deal.
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