Eur-opean Union regulators vetoed Deutsche Boerse AG and NYSE Euronext's plan to create the world's biggest exchange after concluding that the merger would hurt competition.
The deal would have led to a "near-monopoly" in European exchange-traded derivatives, the European Commission said in an e-mailed statement yesterday. "Any efficiencies would not be substantial enough to outweigh the harm to customers caused by the merger."
Deutsche Boerse agreed to acquire its New York rival in a deal valued at $9.5 billion when it was announced last February. Since then the value has plummeted to about $7.3 billion as Deutsche Boerse's shares fell. The companies appealed directly to commission President Jose Barroso last month to try to salvage their merger, arguing that a ban would harm European exchanges and drive business to other parts of the world.
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"This is a black day for Europe and for its future competitiveness on global fin-ancial markets," Deutsche Boerse said in an e-mailed statement.
"The EU Commission's decision is based on an unrealistically narrow definition of the market that does no justice to the global nature of competition in the market for derivatives. We therefore regard the decision as wrong."
The merger prohibition is the commission's fourth since 2004, when it overhauled its rules for reviewing deals.
Antitrust concerns have thwarted other exchange tie-ups around the world. Nasdaq OMX Group Inc. and IntercontinentalExchange Inc. abandoned an unsolicited bid for NYSE Euronext after the US Justice Department threatened to sue. Singapore Exchange Ltd.'s $8.8 billion bid for ASX Ltd. collapsed after Australian Treasurer Wayne Swan said the deal wasn't in the national interest.
"I fully expect consolidation to continue in the industry," said Richard Perrott, an analyst at Berenberg Bank in London. "This last year was a disaster for the exchanges that wanted to merge, but in this deal it was clear from the start it was going to be tricky. You were looking to combine the two dominant derivatives exchanges in Europe."
Deutsche Boerse's acquisition of NYSE Euronext would have put more than 90 per cent of Europe's exchange-traded derivatives market and about 30 per cent of stock trading in the hands of one company. Deutsche Boerse's Eurex is the region's biggest derivatives exchange, while NYSE's Liffe is the second-largest.