FRANKFURT European Commission officials are set to vote in early February on Deutsche Boerse's DB1Gne.DE proposed $9 billion takeover of NYSE Euronext NYX.N to create the world's biggest stock exchange.
The 27 European Commissioners will cast their votes following a recommendation to block the deal by antitrust commissioner Joaquin Almunia, who is worried the combined entity will have more than a 90 percent market share in some key listed derivatives contracts in Europe.
Almunia has said European markets must remain fair, efficient and competitive for both companies and investors and that competition between exchanges is necessary.
Here are the various options open to Deutsche Boerse and NYSE Euronext ahead of the Commission's decision:
SCRAPPING THE MERGER
The companies could pull their deal ahead of a Commission decision, averting a formal ruling on what the implications could be if the Frankfurt, Amsterdam, Brussels, Paris and Lisbon stock exchanges as well as the Eurex and Liffe derivatives exchanges were run by a single company.
Both NYSE Euronext and Deutsche Boerse would simultaneously need to agree to abandon the deal. Without such a consensus, one party may have to pay the other a break fee of 250 million euros ($326 million).
Fears that managers at Deutsche Boerse and NYSE Euronext may expose themselves to shareholder lawsuits for walking away from the deal make this option unlikely, a person familiar with Deutsche Boerse's thinking said.
STAYING THE COURSE
Despite Almunia's recommendation to block the deal, executives from Frankfurt and New York are lobbying the 26 other European commissioners in the hope of persuading them that Almunia's analysis of the markets is flawed.
This leaves a slim chance the deal could go through at a formal vote by the so-called college of commissioners which is expected by February 9.
A key thrust of their argument is to say a combined company will give Europe a global platform to implement European Union and G20 regulatory reforms, and that the derivatives market should be looked at from a global, rather than just a European perspective, taking into account U.S. players like the CME (CME.O).
WAIT FOR THE EU VETO AND APPEAL VIA COURTS
Even after the college of commissioners has voted on the matter, there is one last avenue available: Going to court.
Appealing to the EU courts in Luxembourg is generally a risky and cumbersome move, with the last successful appeals dating back to 2002.
Cases typically take about two years before a ruling, which could erode the industrial logic of a deal and paralyze both companies at a time when rivals may seek to continue consolidation.
Still, if the operators want to prove a point -- over how to define the global derivatives market for example -- then settling the issue in court may help pave the way for other similar deals going forward.
($1 = 0.7665 euros)
(Reporting by Edward Taylor and Andreas Kroener in Frankfurt and Foo Yun Chee in Brussels, Editing by Mark Potter)