The European Union’s decision to block a planned $17 billion tie-up between securities exchange operators NYSE Euronext and Deutsche Börse AG was legitimate, the EU’s second-highest court said Monday, rejecting an appeal from Deutsche Börse.
The deal, which would have created the world’s largest combined market for trading stocks and derivatives, was rejected by EU regulators in early 2012. U.S. antitrust authorities had approved the deal in late 2011, subject to relatively minor conditions.
In its decision, the European Commission, the EU’s top antitrust authority, said the merger would create a “quasi-monopoly” in European derivatives traded on exchanges. The planned new company would have had a 93% market share of such trades.
Deutsche Börse challenged the decision, arguing that the commission should also have considered the swaths of derivatives traded on the so-called over-the-counter market, away from exchanges.
The Luxembourg-based General Court of the EU said that the commission “didn't make errors of law or assessment in considering that exchange-traded derivatives and over-the-counter derivatives belonged to separate markets.”
The court also rejected Deutsche Börse’s arguments “relating to the efficiency gains which the merger could have brought” and to the proposed concessions by the merging parties aimed at assuaging the regulator’s concerns.
The companies had offered to sell NYSE Euronext’s European stock-derivatives business, to cap some trading fees for three years and to open up Deutsche Börse’s clearing platforms to competitors.
“These markets are at the heart of the financial system and it is crucial for the whole European economy that they remain competitive,” Joaquín Almunia, the EU’s former EU antitrust chief, said at the time.
“The remedies offered fell far short of resolving the concerns,” Mr. Almunia had said.
NYSE Euronext has since been bought by Atlanta-based Intercontinental Exchange Inc. in an $11 billion deal that closed in late 2013. Deutsche Börse has prospered as a stand-alone company, reporting a 59% jump in 2014 net profit to €762.3 million ($840.9 million), helped by a strong fourth-quarter performance.
Deutsche Börse could decide to challenge Monday’s ruling at the EU’s highest court, the European Court of Justice, as a final legal recourse.
(Published by The Wall Street Journal – March 9, 2015)