The European Commission has cleared the London Stock Exchange Group’s acquisition of financial market data products provider Refinitiv following an eight-month investigation into the proposed tie-up.
The clearance decision is subject to LSEG meeting certain conditions, including the divestment of its stake in Borsa Italiana group and a commitment to continue providing certain services on an open access basis.
Frontier advised LSEG throughout the Commission’s Phase 1 and Phase 2 investigation process.
LSEG is a diversified global financial infrastructure group that operates a range of trading venues, as well as providing information and technology services and post-trade services across a range of asset classes. Refinitiv is primarily active in the provision of financial information services, analytics and execution services.
Following a wide-ranging investigation, the Commission narrowed its focus to the provision of trading services for European government bonds (EGBs), in which both of the merging parties were active, and the trading and clearing of over-the-counter interest rate derivatives (OTC IRDs) in which the parties were active at different levels of the value chain. It also focused on the impact of the transaction on the provision of financial data products, identifying vertical concerns in relation to the provision of consolidated real-time data feeds, desktop services and index licensing.
To address the Commission’s concerns about the impact of the transaction on competition for the provision of trading services for EGBs, LSEG offered to divest its stake in Borsa Italiana group. This divestment will remove the horizontal overlap between the merging parties’ activities in these markets.
The Commission then agreed to a set of behavioural commitments offered by LSEG to address its remaining concerns. These included a commitment to continue offering its OTC IRD clearing services on an open access basis and to provide access to LSE venue data, FTSE UK Equity Indices, and WM/R FX Benchmarks to all existing and future downstream competitors. In these respects, LSEG is formally committing to its longstanding philosophy of open access service provision in these areas.
You can read the European Commission’s press release here.
Frontier Economics regularly advises clients on the merger clearance process.
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