Deutsche Börse/London Stock Exchange

Compass Lexecon advised Deutsche Börse during the European Commission’s investigation of its proposed merger with the London Stock Exchange Group (LSEG). The proposed merger would have combined the activities of two of the largest financial infrastructure groups in Europe, which included the trading and clearing of derivatives, repos, equities, bonds and commodities, as well as market data, indices, settlement and custody, technology and regulatory reporting.

Having identified over 20 theories of harm, the Commission initiated an in-depth Phase II investigation. During the review, many of the issues initially identified were removed from the Commission’s statement of objections, including equities trading and clearing, exchange traded funds and the licensing of indices. The investigation subsequently focused on unilateral and foreclosure effects in the clearing of derivative products. The Compass Lexecon team made a number of important economic submissions and assisted with the parties’ proposed remedy – the divestment of LCH.Clearnet SA, LSEG’s France-based clearing house.

The Commission’s market testing of the proposed remedy revealed concerns in the area of fixed-income clearing. To address its concerns, the Commission required the divestment of MTS, LSEG’s fixed income trading platform, a small asset compared to the parties’ combined revenues and market value. However, the parties were not prepared to divest MTS, leading the Commission to block the proposed transaction.

Deutsche Börse was advised by Linklaters LLP and led by Christian Ahlborn in London and Carsten Grave in Düsseldorf. The Compass Lexecon team was led by Jorge Padilla, Lorenzo Coppi and Miguel de la Mano, and supported by Urs Haegler, Soledad Pereiras, Sergey Khodjamirian, Orjan Sandewall, Agata Lewicka, Martina Caldana, Georg Clemens, Aleksandra Khimich, Alyssa Lam, Su-Ann Lim, Aiden Lo and Ming Yu Wong.