Did the Competition Commission misunderstand the nature of competition between Liffe and Eurex?
Not much surprise at this
week’s news that the EU Competition
Commission has blcoked the NYSE/Deutche Bóirse deal, but
the rationale for blocking the deal seems odd.
Firstly, and whatever they may claim, Brussels did
take an overly Eurocentric view. Just call the CME in Chicago
and ask where Liffe and Eurex appear on its list of major
Secondly, the Commission claims that Liffe and Eurex
themselves compete but, in fact, they are effectively two
'mini-monopolies’ operating at opposite ends of
the yield curve with almost zero overlap in their products. So
it’s not as if the competitive landscape for
European derivatives was particularly vibrant anyway.
But the biggest issue concerns how the Commission calculated
the potential market share for the combined entity. How could
they exclude OTC derivatives in their sums when just along the
corridor they are also introducing regulation aimed at pushing
the OTC and exchange-traded worlds together?
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