BATS/Chi-X Merger Inquiry: U.K.'s Competition Commission Clears BATS/Chi-X Merger

The Competition Commission (CC) has cleared the anticipated acquisition by BATS GlobalMarkets, Inc of Chi-X Europe Limited. Both companies operate Multilateral Trading Facilities which enable market participants (investment banks, brokers and dealers) to trade equitiesthrough a single platform as an alternative to trading on exchanges such as the LondonStock Exchange.

In its final report published today, the CC confirms its provisional findings published last month and concludes that the acquisition is not likely to result in a substantial lessening of competition in trading services for UK-listed equities.

The CC found that customers would have the power to prevent any attempt by the merged company to raise trading fees or worsen service quality, by taking, or threatening to take, their business elsewhere or even potentially sponsoring new entry. Such sponsored entry has occurred in this sector before: large customers have strong incentives to ensure that trading conditions remain competitive.

Background

The CC is an independent public body, which carries out investigations into mergers, markets and the regulated industries.
The members of the BATS/Chi-X Inquiry Group are: Malcolm Nicholson (GroupChairman), Carolan Dobson, Richard Farrant and Ian Jones.
The Office of Fair Trading (OFT) referred the case to the CC on 20 June. The CC is required to report by 2 December 2011.
The Enterprise Act 2002 empowers the OFT to refer to the CC completed or proposed mergers for investigation and report which create or enhance a 25 per cent share of supply in the UK (or a substantial part thereof) or where the UK turnover associated withthe enterprise being acquired is over £70 million.
The CC had a 24-week period in which it is required to publish its report, which may beextended by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.
Further information on this inquiry, including the terms of reference and other key docu- ments, as well as on the CC and its procedures, including its policy on the provision of information and the disclosure of evidence, can be obtained from the CC website at:www.competition-commission.org.uk.