Tuesday

17th Oct 2017

Commission stops German-British stock merger

  • EU competition chief, Margrete Vestager, said the deal would have been bad for the European economy. (Photo: European Commission)

The European Commission has stopped a merger between the London Stock Exchange (LSE) and Deutsche Boerse, a Frankfurt-based stock exchange, on Wednesday (29 March).

EU competition commissioner Margrete Vestager said she prohibited the move, because it would hurt the European economy.

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"The European economy depends on well functioning financial markets. The whole economy benefits when businesses can raise money on competitive financial markets," she told a news conference. "The commission cannot allow the creation of monopolies, which would have happened in this case," she added.

The merger would have meant that all clearing houses in the EU would belong to the same owner. Clearing houses are the middlemen between sellers and buyers of stocks.

The block was widely expected, as LSE had refused to divest its majority stake in the Italian trading platform, MTS, which the commission had made a condition of the deal's approval.

"Instead, LSE submitted a very complicated offer at the last minute. The partners were not unable to demonstrate these measures would have been effective," Vestager said.

The merger would have given birth to one of the world's leading stock exchanges, valued at €24 billion.

Vestager denied that the prohibition had to do with the UK's decision to leave the EU. The UK ambassador to the EU is expected to hand in the official leaving notification at 1.30pm.

When asked about the danger of LSE falling outside the influence of the EU executive after Brexit, she said that ownership wasn't her concern - but the conditions on the EU market were.

The British and German stock markets had already tried, and failed, to merge in 2000 and 2005.

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