European Commission blocks London Stock Exchange’s planned tie-up with Deutsche Börse

A combined company would have owned the stock exchanges of Germany, Italy and the UK as well as a number of Europe’s largest financial clearing houses

London Stock Exchange shareholders in July last year approved the company's merger with the operator of the Frankfurt stock exchange (Getty)

The London Stock Exchange’s planned £24bn tie-up with its German counterpart Deutsche Börse has been blocked by the European Commission on concerns relating to competition and how dominant a combined entity would have been.

In a statement on Wednesday, the Commission said that it had prohibited the proposed merger after an investigation concluded that a tie-up would have “created a de facto monopoly in the markets for clearing fixed income instruments”.

First announced last February, a deal would have created a European powerhouse in trading stocks, bonds and other financial instruments to rival exchanges of a similar size in Asia and the US.

It would have owned the stock exchanges of Germany, Italy and the UK as well as a number of Europe’s largest financial clearing houses.

“The European economy depends on well-functioning financial markets. That is not just important for banks and other financial institutions. The whole economy benefits when businesses can raise money on competitive financial market,” Margrethe Vestager, a commissioner in charge of competition policy, said in the statement.

“The merger between Deutsche Börse and the London Stock Exchange would have significantly reduced competition. As the parties failed to offer the remedies required to address our competition concerns, the Commission has decided to prohibit the merger,” she added.

London Stock Exchange shareholders in July last year approved the company's merger with the operator of the Frankfurt stock exchange, more than a decade and a half after the pair first attempted a tie-up.

But opposition to the proposed deal, and especially its proposed timing, has been fierce.

Last month, more than three dozen well-known financiers, executives and other City figures asked Theresa May and Bank of England Governor Mark Carney to delay it, saying that a tie-up would be destabilising during Brexit negotiations.

In a letter to The Times Lord Lawson of Blaby, the former chancellor, Andrew Beeson, the former chairman of the asset management company Schroders, and Lord Flight, the chairman of Flight and Partners and a former deputy chairman of the Tory party, insisted that the planned merger is “a risk that the government should recognise, evaluate – and not take now”.

The LSE also in February warned that there was a good chance that the merger would be blocked.

One of the Commission’s conditions for approving the merger was that the LSE sell MTS, an Italian electronic trading platform used for the dealing in government bonds.

The LSE said, however, that it could not commit to spinning off that business.