NYSE Euronext and Deutsche Boerse AG appealed directly to European Commission President Jose Barroso as they fought to salvage their merger, arguing that blocking it would “represent a serious missed opportunity at a critical juncture for Europe.”
The exchanges told Barroso that failure to approve the takeover would place European exchanges at a competitive disadvantage, according to a copy of a letter sent seen by Bloomberg News. The decision would hurt the creation of transparent European markets and drive business to more lightly regulated regions, they said in the letter.
Should the combination be prohibited, “the global consolidation of exchanges might very well shift the balance towards countries favoring light-touch regulation, which would severely endanger the European Commission’s agenda,” the exchanges said. “Approving the proposed combination of Deutsche Boerse and NYSE Euronext would significantly increase the likelihood that the European Union’s regulatory philosophy would become the global standard.”
Chief Executive Officers Duncan Niederauer and Reto Francioni are fighting antitrust concerns, appealing directly to politicians and other European regulators as they seek to salvage their plan to create the world’s largest exchange company. Two people familiar with the talks told Bloomberg last month that concessions offered by the exchanges didn’t go far enough and negotiators for the European Commission planned to prohibit the deal.
‘Bridgehead of Integrity’
The exchanges “have shown themselves to be a bridgehead of integrity and transparency against a tidal wave of opacity and greed that permeates the less-regulated segments of financial markets,” the letter said. The combination will “offer a unique opportunity to deepen regulatory cooperation and reduce the risk of regulatory arbitrage,” it said.
NYSE and Deutsche Boerse still have room to maneuver. Before deciding whether to approve or block a deal, the European Commission must consult competition agencies from the European Union’s 27 member nations, who are scheduled to meet Jan. 17, according to a person familiar with the situation.
Commissioners from each EU country must also vote on a decision and executives can appeal a merger ban at the EU courts. Companies including Oracle Corp. have managed to complete deals to which the European Commission had initial objections.
The European Commission will decide on the deal on Feb. 1, EU Competition Commissioner Joaquin Almunia, the EU’s antitrust chief, told France24 radio in an interview today.
“We’re going to decide on Feb. 1 here at the commission,” he said. “We don’t think of the interests of the exchanges’ shareholders, we think above all of the interest of citizens, we think of the companies who need capital, of the countries, of the national economies of Europe who need capital markets which work well.”
The German government today indicated it wouldn’t intervene.
“The power to make a decision in this case lies exclusively with the European Union,” Ann-Christin Wiegemann, a spokeswoman for the Economy Ministry, told reporters in Berlin today, adding she has no information on whether the German government is in touch with the European Commission on the case.