Competition Commission will allow stock exchange mergers, subject to conditions
The Competition Commission (CC) will allow either Deutsche Börse AG (DBAG) or Euronext NV (Euronext) to acquire London Stock Exchange plc (LSE), provided each party gives undertakings to implement a package of structural and behavioural remedies to ensure the independence of LSE'ss clearing provider.
The CC's report, published today, finds that the proposed acquisition of LSE by either DBAG or Euronext would substantially lessen competition. This is because either merger would make it more difficult for other exchanges to compete with LSE in trading UK equities due to both bidders' direct control or influence over the provision of clearing services.
In the case of Euronext, the structural remedy will remove Euronext's direct influence over LSE's existing clearing provider, LCH.Clearnet. In the case of DBAG, the structural remedy would only apply where LCH.Clearnet is to be replaced with a clearing provider linked to DBAG. In both cases, the structural remedy will primarily operate through limiting the acquirer's shareholdings and board representation in LSE's clearing provider.
Frontier (London) are advisors to the London Stock Exchange.
Printer friendly