Shropshire Star

European regulators kill off LSE’s £21bn merger with Deutsche Borse

The move comes after the LSE rejected the commission’s request last month to offload its 60% stake in the Italian trading platform MTS.

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European regulators have killed off the London Stock Exchange Group’s £21 billion merger with Deutsche Borse, saying the deal would have forged a “de facto monopoly”.

The European Commission moved to block the deal after it said the two exchanges had failed to address its competition concerns.

The move comes after the LSE rejected the commission’s request last month to offload its 60% stake in the Italian trading platform MTS.

Margrethe Vestager, the EU’s competition commissioner, said: “The European economy depends on well-functioning financial markets.

“That is not just important for banks and other financial institutions. The whole economy benefits when businesses can raise money on competitive financial markets.

“The merger between Deutsche Borse and the London Stock Exchange would have significantly reduced competition by creating a de facto monopoly in the crucial area of clearing of fixed income instruments.

“As the parties failed to offer the remedies required to address our competition concerns, the Commission has decided to prohibit the merger.”

The tie-up has faced multiple hurdles since it was first mooted in February last year, with Britain’s Brexit vote flagged by analysts as a potential barrier that could scupper the deal.

European Commissioner for Competition Margrethe Vestager (Virginia Mayo/AP)
European Commissioner for Competition Margrethe Vestager (Virginia Mayo/AP)

The LSE had agreed to offload its French clearing business LCH to Euronext for 510 million euro (£434 million) to help smooth the passage of the merger.

However, further doubts were raised last month when it was revealed that Deutsche Borse boss Carsten Kengeter was under investigation by German authorities over alleged insider dealing.

It marks the third failed attempt in 17 years to create an Anglo-German exchange and came just hours before Britain triggers negotiations over its exit from the European Union.

In a statement, the London Stock Exchange Group said it regretted the EU Commission’s decision not to wave the deal through.

“LSEG believes the proposed merger with Deutsche Borse in combination with the LCH SA remedy would have preserved credible and robust competition in all markets.

“This was an opportunity to create a world-leading market infrastructure group anchored in Europe, which would have supported Europe’s 23 million SMEs and the development of a deeper Capital Markets Union.”

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