NYSE expects full antitrust inquiry into D Börse merger

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Deutsche Börse and NYSE Euronext expect it could take up to a year for European competition regulators to decide whether to clear their proposed merger and that authorities will want to conduct a full investigation, a top NYSE Euronext executive said.

Dominique Cerutti, deputy chief executive at NYSE Euronext, said on Tuesday it was “likely” that the European Commission, Europe’s top antitrust watchdog, would open a “phase two” inquiry.

He remained confident, however, that the deal would not ultimately pose problems for regulators. “We understand the competition review is going to be intense,” Mr Cerutti said, adding that he expected concerns to focus primarily on Europe rather than on the US, where he saw fewer challenges.

Deutsche Börse and NYSE Euronext last week published details of a plan to combine their businesses, whose combined exchanges and clearing houses would generate an annual €4bn ($5.5bn) in revenues, more than any other exchange group. CME Group of the US would be next biggest with €2.3bn.

The German-US combination would also create the dominant derivatives exchange in Europe by merging Liffe – NYSE Euronext’s futures and options exchange – with Deutsche Börse’s Eurex platform. Some market participants expressed concerns about the market power exerted by such a combination, although they noted it would be similar to that wielded in comparable products at the CME Group, which held 98 per cent market share of futures trading in the US.

Mr Cerutti was speaking in Brussels shortly before meeting Joaquín Almunia, EU competition commissioner.

Mr Cerutti described it as a “preliminary” encounter with the European official, in which he hoped to explain the deal “with more colour” before the two companies made a formal filing with the commission. That is likely to take place within the next several weeks.

The two exchange operators are expected to argue that derivatives trading is a global business, as the CME stated in 2007 when its proposed takeover of the Chicago Board of Trade was set to form what became the dominant futures exchange in the US. That deal was eventually approved by the US Department of Justice.

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