Expert Opinion: Deutsche Börse/London Stock Exchange: Assessing the European Commission’s Foreclosure Concerns

In March 2017, the European Commission issued its decision prohibiting the merger between Deutsche Börse AG and London Stock Exchange Group. In an assessment of the decision, our experts argue that the European Commission’s foreclosure concerns in the markets for post-trade services were not justified.

The Commission claimed that the merged entity would have had a de-facto monopoly in the upstream (clearing) markets, giving it the ability and incentive to foreclose competitors in the downstream (settlement/custody/collateral management) market – particularly its closest competitor, Euroclear.

We regard this concern as unsupported by the economics of how these businesses actually operate, even taking as given the Commission’s market delineation and its conclusion that the merged entity would possess market power upstream (which the parties disputed). The evidence the Commission used to argue that the merged entity had the ability to foreclose Euroclear was not robust, and its claim that, post-merger, the parties would have had an incentive to engage in anticompetitive exclusionary conduct against Euroclear was illogical and inconsistent with the Commission’s own findings about competition in the downstream market.

Click here to read the Expert Opinion briefing.