EC antitrust officials not swayed by NYSE-Deutsche Boerse

FRANKFURT/NEW YORK Wed Dec 21, 2011 9:59pm EST

Detail seen at the NYSE Euronext cash markets operations room at the transatlantic stock market operator responsible for the proper functioning of the Paris, Brussels, Amsterdam and Lisbon stock markets in Paris August 19, 2011.            REUTERS/Philippe Wojazer

Detail seen at the NYSE Euronext cash markets operations room at the transatlantic stock market operator responsible for the proper functioning of the Paris, Brussels, Amsterdam and Lisbon stock markets in Paris August 19, 2011.

Credit: Reuters/Philippe Wojazer

FRANKFURT/NEW YORK (Reuters) - European Commission antitrust officials on Wednesday showed no sign of being swayed by Deutsche Boerse and NYSE Euronext's last-ditch arguments to save their $9 billion deal, sources said, making it increasingly likely the exchange operators will have to take their campaign directly to the commissioners.

A meeting with members of the EC antitrust case team was factual and cordial, two people familiar with the meeting said, but executives and regulatory officials appeared to remain at loggerheads over their views about the derivatives market.

Deutsche Boerse and NYSE Euronext will now likely center their lobbying efforts on bypassing the views of the antitrust case team, to focus on antitrust commissioner Joaquin Almunia himself, or on the so-called college of 27 commissioners, these people said.

The exchanges are likely to make a case for why their deal to create a pan-European exchange operator -- and the world's largest -- would be good for the European Union at a time when the continent is dealing with a deep crisis.

"There are big stakes for Europe here at a time when Europe's problems are front and center but no one is paying attention to this deal," one of the sources said.

The latest meeting between executives and regulators follows weeks of terse negotiations during which European Union staff made clear their reservations about approving a combination of Deutsche Boerse's Eurex and NYSE Euronext's Liffe on concerns the merged entity will have a monopoly over European listed derivatives trading.

Both Boerse and NYSE Euronext have said they will not pursue the merger if they are asked to divest either Eurex or Liffe. A formal decision by the European Commission is not expected until January or early February.

The exchanges have argued their control over the derivatives segment is much lower if the vast over-the-counter (OTC) market is included in the assessment of the global derivatives market.

But their merger plans were dealt a blow when the European Union decided to exclude OTC derivatives from its review of the merger.

In a bid to assuage regulatory concerns, Deutsche Boerse and NYSE Euronext this week offered to cap fees on trading in their European derivatives contracts for three years, and to sell the entire single stock equity derivatives business of NYSE Euronext's Liffe unit.

The latest offer came after a first set of concessions made in November failed to address the European Commission's competition concerns while opponents have criticised the second batch of proposals offered last week as only incremental adjustments.

Deutsche Boerse and NYSE declined to comment. Antitrust officials could not be reached for comment late on Wednesday.

(Reporting By Paritosh Bansal and Edward Taylor; Additional reporting by Foo Yun Chee and Jonathan Spicer; Editing by Phil Berlowitz)

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