EU blocks takeover of London Stock Exchange

BRUSSELS • European Union regulators dealt a final blow to Deutsche Boerse's planned takeover of London Stock Exchange (LSE) Group, a symbolic block on EU-UK integration, on the same day that Britain formally served notice of its decision to quit the EU.

The US$14 billion (S$19.5 billion) deal to create Europe's biggest exchange would have harmed competition in the soon-to-be 27-nation EU by creating a de facto monopoly for clearing bonds and repurchase agreements, the European Commission said in an e-mailed statement yesterday. The decision, flagged last month by LSE, thwarts Deutsche Boerse's expansion just five years after the EU banned a proposed tie-up with NYSE Euronext.

"The commission cannot allow the creation of monopolies and that is what would have happened in this case," EU anti-trust commissioner Margrethe Vestager said.

LSE was "not prepared" to sell a small unit that would have removed concerns that the combined firm could have weakened rival Euronext.

EU regulators have become increasingly tough on big deals, demanding weighty concessions to eliminate overlapping businesses amid concerns that a combined firm could dominate an industry and increase prices.

"The prohibition is a setback for Europe, the Capital Markets Union and the bridge between continental Europe and Great Britain," Deutsche Boerse chairman Joachim Faber said in an e-mailed statement.

"A rare opportunity to create a global market infrastructure provider based in Europe and to strengthen the global competitiveness of Europe's financial markets has been missed," he added.

Opposition to the Frankfurt-based exchange's merger plans went up a gear after Britain voted to leave the EU last year. German concerns over moving the combined firm's headquarters to London added to political riptides over clearing euro trades outside the euro area.

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A version of this article appeared in the print edition of The Straits Times on March 30, 2017, with the headline 'EU blocks takeover of London Stock Exchange'. Print Edition | Subscribe