The Office of Fair Trading(OFT) has referred the proposed takeover of the London Stock Exchange to the Competition Commission as Government officials are concerned about issues relating to the ‘clearing' of equity trades.
A statement issued yesterday by OFT chairman Sir John Vickers suggests neither takeover deal by Deutsche Borse or Euronext has so far managed to satisfy officials at the OFT that either deal will not lessen the competitive ability of the LSE to handle on-exchange trades when dealing with European equities.
In particular, the OFT has decided, having read the terms of the acquisition offers, any takeover might affect the supply of on-exchange trading services for equities in the UK in both cases and could affect UK equity clearing.
“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 Competition Commission will also want to consider the effects of the mergers on competition in clearing services, particularly with the DBAG bid,” says Vickers.
Any conclusion to proposed takeover talks will now be delayed until the autumn as the Competition Commission will be expected to report by 12 September 2005, adds the OFT.
This is not the first such potential opposition to any takeover deal, as both the Association of British Insurers and the Financial Services Authority have spoken out questioning the impact of such a deal on the UK financial services industry.IFAonline
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