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UK conditionally approves bids for LSE

Britain's Competition Commission gave a green light yesterday to proposed takeovers of the London Stock Exchange (LSE) by the German Deutsche Boerse or the pan-European market Euronext, but attached conditions.

Unveiling the findings of a probe into the impact of possible tie-ups, the Competition Commission said it would allow a merger with either of the foreign markets -- but repeated that such a change would hinder competition in the British share trading market.

Each potential buyer would have to take steps to reduce their influence over post-trade clearing services providers "to ensure the independence of the LSE's clearing provider," the report said.

"Either merger would make it more difficult for other exchanges to compete with LSE in trading UK equities due to both bidders direct control or influence over the provision of clearing services," it added.

Repeating its preliminary findings from July, the CC said that "the proposed acquisition of LSE by either Deutsche Boerse or Euronext would substantially lessen competition."

The watchdog ordered Euronext to reduce its stake in the LSE's current clearing service provider, LCH.Clearnet, from 41.5 percent to no more than 14.9 percent.

It also said that Euronext's representation on the LCH.Clearnet board should be limited to one seat.

The regulator also said that Deutsche Boerse would have to reduce its stake in wholly-owned clearing services unit, Eurex Clearing, to 14.9 percent if it tried to appoint the company as the LSE's clearing services provider after a successful takeover.

The panel had already stated in July that competition would be harmed because each of the possible suitors owned or controlled clearing services.
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