The European Commission has approved the London Stock Exchange Group’s (LSEG) proposed acquisition of data analytics firm Refinitiv, while underscoring mandatory pre-conditions to avoid harming market competition.
Based in New York, Refinitiv is among the largest financial markets data and infrastructure providers, serving more than 40,000 institutions in 190 countries.
Today's decision follows an in-depth investigation to satisfy the terms of the EU Merger Regulation that began in June 2020 by proposing remedies to multiple concerns by the commission that the deal may harm competition in several EU markets.
The 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 has now confirmed its terms that LSEG must meet for the deal to proceed.
Chief among these is that LSEG must divest 99 per cent of its stake in the Borsa Italiana group, which includes MTS, LSEG's trading venue for EGBs. To this end, LSEG inked a preliminary deal with Euronext in October last year to sell the stake.
Although several regulatory hurdles still stand between Euronext and completing its deal, today’s confirmation by the commission that LSEG must sell to acquire Refinitiv significantly improves Euronext’s chances of success.
Euronext already has approval to acquire the G7 stock exchange from the German Federal Cartel Office, its shareholders, and the Italian Council of Ministers.
Approvals are still needed in several jurisdictions, including a declaration of non-objection from Euronext’s College of Regulators, and from the commission that Euronext is a suitable buyer.
Despite these hurdles, Euronext predicts the deal will be complete in the first half of the year.
Elsewhere, LSEG is also required to continue offering global OTC IRD clearing services performed by LCH Swapclear on an open-access basis. It must not engage in commercial strategies that would discriminate against customers based on the source of their OTC IRD trade submitted to LSEG for clearing.
Executive vice president Margrethe Vestager, in charge of competition policy, says: “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.”
