Bloomberg News

NYSE-Deutsche Boerse Remedies Said To Fall Short of EU Demands

December 28, 2011

Dec. 21 (Bloomberg) -- European Union regulators told NYSE Euronext and Deutsche Boerse AG that new concessions they offered to allay antitrust concerns in their merger don’t go far enough, two people familiar with the discussions said.

The exchanges met with officials in Brussels today to discuss their revised offer, which included capping fees on derivatives trading and clearing for three years, the sale of NYSE’s Liffe single-stock derivatives business, and the licensing of the Eurex trading system to a third party, said the people, who declined to be named because the talks are private.

NYSE and Deutsche Boerse are trying to convince European regulators that merging to create the world’s largest exchange operator won’t stifle competition in derivatives and clearing. The last day the commission can rule is Feb. 9.

Before deciding whether to approve or block a deal, the European Commission must consult competition agencies from the European Union’s 27 nations. Commissioners from each EU country must also vote on a decision. Companies can then appeal a merger ban at the EU courts.

EU officials told the exchanges that rivals and customers believe the latest proposed remedies aren’t sufficient, according to responses to a questionnaire, the people said. Regulators haven’t drafted an indicative decision yet, they said.

Derivatives Sale

Antitrust officials investigating the case had previously indicated the exchanges would have to divest a derivatives business such as Liffe or Deutsche Boerse’s Eurex, the people said. Chief executive officers of both exchanges have said they aren’t prepared to consider that option.

Richard Adamonis, a spokesman for NYSE Euronext in New York, declined to comment as did Frank Herkenhoff, a Frankfurt- based spokesman for Deutsche Boerse.

The European Commission breaks for holidays on Dec. 23 and returns on Jan. 2.

NYSE and Deutsche Boerse have already offered to give any buyer the option to access Eurex Clearing for post-trade processing.

Exchange executives have been negotiating with European regulators who told Frankfurt-based Deutsche Boerse and New York-based NYSE at a meeting in Brussels on Dec. 6 that their Nov. 17 offer to divest some European single-equity derivatives units didn’t sway customers and rivals, according to people familiar with the discussions. Regulators weren’t convinced that offering competitors limited access to Deutsche Boerse’s clearinghouse would do enough to foster competition for exchange-traded derivatives, the people said.

That meeting followed two days of talks with regulators in October where the exchanges also failed to alleviate antitrust concerns. Regulators have told the companies that their merger would monopolize derivatives trading in the region.

The takeover would put more than 90 percent of the region’s exchange-traded derivatives market and about 30 percent of European stock trading in the hands of one company. Deutsche Boerse’s Eurex is the region’s biggest derivatives exchange, while NYSE Euronext owns Liffe, the second-biggest.

--With assistance from Aoife White in Brussels. Editors: Chris Nagi, Michael Regan

To contact the reporters on this story: Nandini Sukumar in London at nsukumar@bloomberg.net;

To contact the editors responsible for this story: Andrew Rummer at arummer@bloomberg.net;


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