EU Regulators Veto Deutsche Boerse-NYSE Euronext Merger

European Union regulators have vetoed a proposed merger between Deutsche Boerse and NYSE Euronext (NYSE:NYX), saying the plan to create the world’s largest exchange would hurt competition.

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The European Commission said the deal would have led to a “near-monopoly” in European exchange-traded derivatives. “Any efficiencies would not be substantial enough to outweigh the harm to customers caused by the merger,” the commission said in an e-mailed statement.

Deutsche Boerse announced its plan to acquire NYSE Euronext last February in a deal valued at $9.5 billion. Since then, the value has plunged to about $7.3 billion as Duetsche Boerse shares fell.

The merger would have put more than 90 percent of Europe’s exchange-traded derivatives market and about 30 percent of stock trading in the hands of the company. Both NYSE Euronext and Deutsche Boerse offered to sell overlapping businesses and give rivals access to post-trade services in an effort to convince regulators the merger wouldn’t stifle competition.

But the proposed concessions didn’t go far enough. “We tried to find a solution, but the remedies offered fell far short of resolving the concerns,” said Competition Commissioner Joaquin Almunia in the commission’s statement today. “These markets are at the heart of the financial system and it is crucial for the whole European economy that they remain competitive.”

Antitrust officials told the exchanges that they would have to divest an entire derivatives business such as NYSE’s Liffe or Deutsche Boerse’s Eurex if the merger was going to earn their approval, but the chief executives of both exchanges said they weren’t prepared to consider that option.

Both exchanges are now expected to focus on their standalone strategies, and are negotiating the termination of their merger.

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To contact the reporter on this story: Emily Knapp at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com