EU stops London Stock Exchange-Deutsche deal on monopoly fears

Brussels has officially killed off the London Stock Exchange’s £24 billion merger with Deutsche Börse over fears it would create a “de facto monopoly” in the bond-clearing market.

Competition Commissioner Margrethe Vestager said the tie-up would give the duo too much power over fixed-income instruments and had the potential to divert “downtream” settlement, custody and collateral management business away from rivals.

“The merger between Deutsche Börse and the London Stock Exchange would have significantly reduced competition by creating a de facto monopoly in the crucial area of clearing of fixed-income instruments,” Vestager (pictured) said.

“As the parties failed to offer the remedies required to address our competition concerns, the Commission has decided to prohibit the merger.”

The tie-up, orchestrated by LSE chief executive Xavier Rolet and Deutsche Börse’s Carsten Kengeter, has faced political pressure in Germany over the location of its headquarters in London.

Brexit has also been a headache as the UK exits the EU.

The duo had proposed selling the French clearing arm of LCH.Clearnet, the £443 million clearing arm majority owned by the LSE, to meet the competition requirements but the Commission today said it was not enough to assuage its fears over a monopoly in fixed-income instruments.

The French buyer of Clearnet, Euronext, still wants to snap up the unit despite the collapse of the UK group’s merger with Deutsche Börse. Chief executive Stéphane Boujnah said he remained a “willing buyer”.