The OFT has decided that the test for reference is met in relation to the supply of on-exchange trading services for equities in the UK in both cases. In respect of DBAG's bid, additional concerns arise in relation to the supply of clearing services for equities trades in the UK.
Sir John Vickers, OFT Chairman, said: 'The proposed bids for the LSE come at a time of emerging competition in equities trading between the LSE, DBAG and Euronext. Although such competition has so far been episodic, it needs to be investigated whether either merger would lessen future competition in equities trading in the UK. The CC will also want to consider the effects of the mergers on competition in clearing services, particularly with the DBAG bid.'
Although DBAG and Euronext each proposed constructive undertakings instead of reference, the OFT considered that neither proposal was at this stage able to resolve all competition concerns in a sufficiently clear-cut manner.
The CC is expected to report by 12 September 2005.
Background
- The Reference Test - The OFT has a duty to make a reference to the CC if the OFT believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
- Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.
- The CC may extend the 24 week period within which it is required to publish its report by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.
- The text of these decisions will be placed on the mergers section and will also appear in the Office's Weekly Gazette as soon as is reasonably practicable. See anticipated acquisition of Euronext N.V. of the London Stock Exchange plc See anticipated acquisition of Deutsche Börse AG of the London Stock Exchange plc
