EU News
Printable version

Mergers: Commission clears acquisition of Refinitiv by London Stock Exchange Group, subject to conditions

The European Commission has approved, under the EU Merger Regulation, the acquisition of Refinitiv by the London Stock Exchange Group (‘LSEG'). The approval is conditional on full compliance with a commitments package offered by LSEG.

Executive Vice-President Margrethe Vestager, in charge of competition policy, yesterday said:

“Infrastructure competition in trading services and access to financial data products on fair and equal terms is essential for the European economy and in particular for consumers and businesses. Today, we can approve the proposed acquisition of Refinitiv by LSEG because LSEG offered commitments that will ensure that the markets will remain open and competitive and the acquisition will not lead to higher prices or less choice and innovation for these products.”

Yesterday's decision follows an in-depth investigation of the proposed transaction, which combines the activities of LSEG and Refinitiv. LSEG is a global financial markets infrastructure business. It also offers financial data products. Refinitiv is a provider of financial data products. It also controls Tradeweb, which operates trading venues.

The Commission's investigation focused on trading services for European Governments Bonds (‘EGBs'), where both parties are active, as well as on the provision of financial data products and the provision of trading and clearing services for over-the-counter interest rate derivatives (‘OTC IRDs'), where one party is active upstream of the other in the value chain.

The Commission's investigation

During its in-depth investigation, the Commission gathered extensive information and feedback from a very large number of competitors and customers of LSEG and Refinitiv, in particular trading venues, clearing houses, data vendors, banks and other investors. The Commission has also cooperated with competition authorities around the world, as well as with the European Securities and Markets Authority (‘ESMA').

Following its in-depth investigation, the Commission had concerns that the transaction, as initially notified, would have harmed competition in the following markets:

a) Horizontal concerns in electronic trading of European Government Bonds (‘EGBs'):

The Commission's investigation confirmed the concerns identified at the time of the opening of the in-depth investigation that the transaction would have led to the creation or the strengthening of a dominant position in the market for EGB electronic trading, and its potential sub-segments.

b) Vertical concerns in trading of dealer-to-customer over-the-counter interest-rate derivatives (‘OTC IRDs'):

The Commission's investigation confirmed that the transaction would have given to LSEG the ability and incentives to foreclose Tradeweb's rival trading venues and middleware providers. LSEG would do this by ceasing to clear, increasing charges, degrading the quality, imposing disadvantageous requirements for trades executed on Tradeweb's rival venues or through middleware providers, or also by degrading LSEG's cooperation with Tradeweb's rivals for the introduction of new products.

c) Vertical concerns in consolidated real-time datafeeds ('CRTDs') and desktop services:

The market investigation showed that the London Stock Exchange trading data generated and the UK Equity Indices provided by FTSE Russell, are significant inputs for datafeeds and desktop services, and that there are no viable alternative to LSEG's offerings. As such, absent the commitments, the proposed transaction would have given to LSEG the ability and incentives to refuse or limit the access of Refinitiv's competitors in LSE's venue data and FTSE Russell UK Equity Indices.

d) Vertical concerns in index licensing:

The market investigation showed that Refinitiv's WM/R FX benchmarks are among the most important inputs for index design and calculation and that Refinitiv's benchmarks have widespread acceptance on the market with no viable alternative. The Commission thus found that following the proposed transaction, competitors in index licensing could be denied access to Refinitiv's necessary input data.

Click here for the full press release

 

Original article link: https://ec.europa.eu/commission/presscorner/detail/en/IP_21_103

Share this article

Latest News from
EU News

Facing the Future...find out more