ACCC Concludes Refinitiv-LSEG Merger Review

The ACCC examined horizontal overlaps and vertical relationships between LSEG and Refinitiv, as well as potential competition issues, and is not opposed to the transaction.

The ACCC (Australian Competition and Consumer Commission) has said in a statement that it will not oppose the proposed acquisition of Refinitiv by LSEG (London Stock Exchange Group).

The proposed acquisition is a global transaction and is being considered by a number of competition regulators around the world, including the European Commission. The transaction has been cleared in the US and Canada amongst other jurisdictions.

In Australia, LSEG primarily supplies clearing services for OTC interest rate derivatives, venue data generated by trading activity on its European trading venues and platforms, and licensing of fixed income and cash equities indices (such as FTSE 100).

Refinitiv primarily distributes venue data and indices via consolidated data feeds and desktop terminals, licenses the WM/Reuters foreign exchange benchmark rates, and supplies trading services for OTC interest rate derivatives and foreign exchange derivatives.

The ACCC examined horizontal overlaps where both parties supply competing products and services along with a number of vertical relationships between LSEG and Refinitiv, where one party supplies inputs to the other or its rivals.

The ACCC’s merger investigation was extensive and involved contact with a large number of stakeholders and examination of internal documents, and found no material competition concerns in relation to horizontal aspects of the transaction. “We consulted with a wide range of competitors and customers and the majority did not express concerns with this transaction,” said ACCC Chair Rod Sims.

In terms of the vertical relationships between LSEG and Refinitiv, the ACCC considered whether the merged entity could favour Refinitiv’s trading venues and platforms in the provision of LSEG’s clearing services. It also considered whether the merged entity could restrict LSEG’s clearing services rivals from accessing Refinitiv’s trading venues and platforms.

“We determined that the merged entity was unlikely to engage in anticompetitive foreclosure as a change to the established open access approach was likely to lead to commercial, reputational and regulatory risks,” Sims said.

The ACCC also investigated whether the merged entity could affect competition for financial indices and financial data products by restricting rival providers’ ability to distribute those products via Refinitiv’s real-time data feeds and desktop terminals, or if rivals rely on the merged entity for inputs such as currency benchmark rates, pricing data for financial instruments and security identifiers.

“The industry is characterised by interconnected relationships, where large, sophisticated market participants are often both customers and competitors of each other across different products and services. If the merged entity sought to disadvantage rivals, there would be a negative response from industry and the potential for increased regulatory scrutiny,” Sims said.

“Such a strategy could also diminish the value of the merged entity’s offering relative to competitors. Rivals would likely be able to effectively leverage their bargaining power to defeat any attempted price rise or decrease in service quality.”

Further information on the ACCC’s Refinitiv-LSEG merger review is available here.

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