Did the EU just kill the British-German merger of exchanges because of Brexit and Article 50?

On March 28 UK Prime Minister Theresa May officially signed Article 50, setting in motion the process for Britain to officially leave the European Union.  And on Wednesday that paperwork was handed over to EU officials, thus beginning what is expected to be a two year process to both dissolve and re-entreaty different agreements that may or may not extend beyond their former privileges in the continental coalition.

However as expected, the bureaucrats in Brussels did not take Britain’s leaving their dominion very well, as there has been extensive jawboning about how much the UK should pay for divorcing the EU, as well as threats to their banks and businesses in being able to conduct business with other EU members.  And while much of this makes for good political theater, one event on March 29 has to be looked at as a possible retaliation for getting out from under the Union’s grasp.

That is because on the exact day that Britain handed off Article 50 to the European Parliament, EU regulators nixed a proposed merger that would have joined the Deutsche Bourse with London market exchanges, and would have created the largest single equity market in Europe.

EU antitrust regulators have rejected the proposed €29 billion ($31.3 billion) merger of Deutsche Boerse and the London Stock Exchange (LSE). The combined exchange would have become the largest in Europe.

“The Commission cannot allow the creation of monopolies, and that is what would have happened in this case," Margrethe Vestager, the EU’s antitrust commissioner, told reporters in Brussels.

According to Vestager, the LSE was “not prepared" to sell the Paris arm of its clearing house LCH. A merger without selling the unit would have hit rival Euronext NV. Euronext NV is a European stock exchange based in Amsterdam, Brussels, London, Lisbon, and Paris.

"As the parties failed to offer the remedies required to address our competition concerns, the Commission has decided to prohibit the merger,” Vestager said.

“The prohibition is a setback for Europe, the Capital Markets Union and the bridge between continental Europe and Great Britain,” Deutsche Boerse Chairman Joachim Faber said in a statement emailed to Bloomberg.

“A rare opportunity to create a global market infrastructure provider based in Europe and to strengthen the global competitiveness of Europe’s financial markets has been missed,” he added. – Russia Today

Talks to merge the two markets began in February of last year, but hit a roadblock in June following the British people’s decision to vote for an exit of the Eurozone.  And today’s announcement by the EU to cancel the merger on the official day of Brexit creates an interesting dichotomy that in the end will be worse for the coalition as the UK can now look Eastward and seek market partnerships with China or even Russia in their own growing economic unions.

With Britain soon to be disconnected from EU authority, the battle between London and Frankfurt got a little more interesting as to who will win the right to control China’s RMB expansion in the European theater when just hours earlier it appeared that they may have done this jointly through a historic merger.