EU Court upholds Deutsche Börse/ NYSE merger prohibition

It is rare for a competition authority to block a merger outright. In its 9 March judgment the General Court has upheld the European Commission’s prohibition in 2012 of the Deutsche Börse/ NYSE merger which would have created the largest global exchange trading platform.  The Court found that the Commission had not made errors in its decision-making process and had rightly concluded that the merger would have eliminated healthy competition.

The Commission’s main concern was that the tie-up would have given the companies control of over 90 per cent of the worldwide market in European exchange-traded financial derivatives.  Some assessments place the parties’ combined share as much higher. 

Deutsche Börse argued that the Commission had failed to give proper consideration to horizontal competitive pressure on the parties and challenged the Commission’s approach to market definition.  It further argued that the Commission did not give sufficient weight to efficiencies that the parties put forward to seek to offset the competitive effects of the transaction.   

The Court concluded that derivatives and OTC products are in different markets and that the Commission was correct in its findings about the potential effects of the merger. It also rejected the contention that the Commission had not properly evaluated the commitments that the parties put forward including the disposal of their overlapping single-equity derivatives operations. 

The Court’s decision is not unexpected. In the absence of any obvious procedural irregularities it is rare for the Court to unsettle the Commission’s substantive findings. 

The full text of the Court’s judgment has not yet been published and it remains to be seen whether Deutsche Börse will bring an appeal to the Court of Justice.  Beyond the points of legal principle at stake, questions do need to be asked about the relevance of any Court of Justice finding several years after the attempted merger.  The prospects of overturning the General Court’s endorsement of the Commission’s findings also need to be seen against the 2012 takeover of NYSE by Inter-Continental Exchange. But this is a comment not so much about the history of this transaction but a comment on the reality that challenges to merger decisions may often reach closure long after the commercial rationale for the deal has either changed or even collapsed. 

Case T-175/12 - Deutsche Börse v Commission