The European Commission has announced it has opened an in-depth investigation into the planned merger between Deutsche Börse AG and NYSE Euronext Inc., after the initial market investigation indicated competition concerns in a number of areas.

In particular, the field of derivatives trading and clearing gave rise to ‘significant’ concerns, as the merger would bring together the two largest derivatives exchanges in Europe.

The commission said it is mainly concerned that due to the removal of an important competitor, the merger would have a negative impact on innovation in derivatives products and technology solutions. Further, concerns were raised over reduced competitive pressures on fees.

Moreover, the possibilities for fee competition may be reduced due to increased difficulties for competitors to enter the market.

The investigation also revealed concerns that in the absence of access to the merged company’s enlarged post-trade clearing facilities, entry by rival derivatives platforms would be made more difficult in a market the commission said was already characterised by high barriers to entry.

Pension funds, mutual funds, retail banks, professional brokers and investment banks were among customers the commission said could be impacted by the merger.

Joaquín Almunia, commission vice president in charge of competition policy, said: “The proposed merger would remove a strong competitor from the market and would give the merged company by far the leading position in derivatives trading in Europe. The commission needs to make sure that markets which are at the heart of the financial sector remain competitive and efficiently deliver to users.”

Following the announcement, the commission has 90 working days to take a final decision on whether the transaction would reduce effective competition in the European Economic Area.

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