The European Commission reportedly blocked the proposed merger between NYSE Euronext and Deutsche Boerse on fears that European derivative markets would become highly monopolized.
NYSE�s public relations team was quick to deliver a �statement in response to media reports� noting it had yet to receive any official decision by the European Commission.
Different media outlets reported throughout the trading session that Joaquin Almunia, the Commission�s vice president in charge of competition policy, had recommended blocking the merger that would create the world�s biggest stock exchange operator arguing it would create a monopoly in derivatives and clearing.
According to DealBook, which cites people briefed on the matter, the chief executives of both companies will meet this Wednesday to discuss how to save the merger, which had been cleared by the Department of Justice last December 22. Reto Francioni, Deutsche Boerse CEO will reportedly travel to New York and meet NYSE�s Duncan Niederauer to figure out their following steps.
The main problem appears to be the merging of Liffe and Eurex, the companies� derivatives exchanges. Combining these two could possibly �have a negative impact on innovation in derivatives products and technology solutions� while creating a �closed vertical silo� effectively shutting out competitors, according to a European Commission statement from August 2011.
NYSE and Deutsche Bourse� lobbyists have argued that the Commission ignores the larger market for over-the-counter (OTC) derivatives and that the combined market share of Liffe and Eurex, at 19%, would remain smaller than their main competitor, the CME Group, according to DealBook.
The companies have extended the deadline to close the deal to February 9, giving them a few more days to convince lawmakers.
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