Antitrust Law Daily Wrap Up, ANTITRUST NEWS: European Commission clears InterContinental Exchange's acquisition of NYSE Euronext, (Jun 25, 2013)

By Jeffrey May, J.D.

InterContinental Exchange, Inc.'s proposed acquisition of NYSE Euronext has been cleared by the European Commission (EC) without conditions. The EC announced yesterday that the proposed transaction would not raise competition concerns in the markets for the provision of trading and clearing services for certain exchange traded derivatives (ETDs), in particular agricultural (canola and rapeseed) and soft commodities (cocoa, coffee, sugar), derivatives, and U.S. equity index derivatives.

The EC also concluded that there would be no competition concerns in markets where there are minor overlaps of the activities of the two companies: agricultural ETDs (barley, corn and milling wheat), foreign exchange derivatives, and bond trading. In addition, no vertical competition concerns were identified based on the relationship between trading and clearing of derivatives.

Intercontinental Exchange describes itself as “a leading operator of regulated exchanges and clearing houses serving the risk management needs of global markets for agricultural, credit, currency, emissions, energy, and equity index products.”

The firm operates futures exchanges, over-the-counter (OTC) derivatives trading platforms and derivatives clearing houses in the United States, Canada, and Europe. It also provides exchange connectivity services with respect to its own platforms and front-end trade execution services to third party platforms, according to the EC.

NYSE Euronext is a leading global operator of financial markets. The company's exchanges in Europe and the United States trade equities, futures, options, and fixed-income and exchange-traded products.

The EC notes that NYSE Euronext is active in the sector of cash listing services, cash trading, and post trading services, derivatives trading and clearing services, information services, and technology solutions in the United States and Europe. The firm also provides exchange connectivity services with respect to its own platforms, but licenses front-end trade execution services to third party providers, according to the EC.

Both firms issued statements welcoming the EC's action and noting that completion of the transaction remained subject to final approval from the U.S. Securities and Exchange Commission, the Euronext College of Regulators, and other national financial regulators.

With respect to U.S. antitrust clearance, the waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act in connection with the proposed transaction expired in February. InterContinental Exchange shareholders approved the deal earlier this month.

EC approval of the InterContinental Exchange/NYSE Euronext combination comes less than 17 months after the EC blocked the proposed merger of NYSE Euronext and Deutsche Borse. Although the U.S. Department of Justice Antitrust Division closed its investigation into that deal without taking action, the EC determined that the combination would have resulted in a quasi-monopoly in the area of European financial derivatives traded globally on exchanges. In light of the EC's decision, NYSE and Deutsche Borse agreed to a mutual termination of the business combination agreement in February 2012.

Companies: InterContinental Exchange, Inc.; NYSE Euronext

News: Antitrust