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NYSE-Deutsche Boerse Would Pose ‘Serious’ Problems, EU Says

EU Competition Commissioner Joaquin Almunia
EU Competition Commissioner Joaquin Almunia said, “Some problems of competition will not be solved by this merger but will be aggravated.” Photographer: Giuseppe Aresu/Bloomberg

NYSE Euronext and Deutsche Boerse AG’s planned merger of trading and post-trading operations would cause “serious” concerns, according to the European Union’s antitrust chief.

“Some problems of competition will not be solved by this merger but will be aggravated,” EU Competition Commissioner Joaquin Almunia said today in an interview with Bloomberg Television in Davos, Switzerland.

Almunia’s team at the European Commission has told the two companies they’ll seek to veto the deal to create the world’s largest exchange because it would monopolize derivatives trading in the region, according to two people familiar with the matter. Almunia has promised a ruling on Feb. 1.

NYSE and Deutsche Boerse appealed directly to commission President Jose Barroso earlier this month to try and salvage their merger, arguing that an EU ban would harm European exchanges and drive business to other parts of the world.

“If we overlap two exchanges that are competing” and “we linked the trading activities with the post-trading activities, establishing a silo, serious problems of competition arise,” Almunia said today.

Frank Herkenhoff, a spokesman for Deutsche Boerse, declined to comment. James Dunseath, a spokesman for NYSE Euronext in Davos, declined to comment.

Merger Ban

A merger prohibition next week would be the EU’s fourth since 2004, when it overhauled its rules for reviewing deals. The commission, the EU’s executive arm, is led by 27 commissioners drawn from each of the bloc’s member states. They must jointly approve EU decisions.

While people familiar with the talks have indicated that fellow commissioners won’t oppose Almunia’s veto plan, Michel Barnier, in charge of financial services, said yesterday he’s still making up his mind on the case.

Barnier told Bloomberg Television in Davos that he’s been unable to give his full attention to the dossier because of an official trip last week to Asia.

“It’s a very important decision,” Barnier said. “I need a bit of personal time to work on this dossier and to make a judgment.”

Deutsche Boerse’s Eurex is the region’s biggest derivatives exchange, while NYSE Euronext owns Liffe, the second-biggest in Europe. The Frankfurt-based company agreed to acquire its New York rival in a deal valued at $9.5 billion when it was announced in February.

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 organization.

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