The birth of a financial champion resulting from the merger of Deutsche Börse (the Frankfurt exchange) and NYSE Euronext (New York, Paris, Amsterdam, Brussels and Lisbon) will not be taking place, at least not now.

On 1 February 2012, the European Commission ruled out the merger.

The executive, based on the EU merger regulation, objected to the proposed merger between Deutsche Börse and NYSE Euronext on the ground that it would have created a virtual monopoly for international stock market transactions on European derivatives. The two exchanges together control more than 90% of global transactions on such products.

The Commission’s investigation showed that new competitors would stand little chance of gaining a sufficient foothold on the market to represent a credible competitive threat to the merged entity. The two companies concerned proposed to dispose of certain of their assets and offer access to their clearing house for certain categories of new contracts. The Commission nevertheless found that these commitments were not sufficient to address the competition problems it anticipated.

The decision, debated by the College of Commissioners, did not obtain unanimous support.

I for one consider that the merger would have created a coherent and strategic entity. It would have offered new opportunities for European activities. The reason given by Brussels is inappropriate at a time when Europe’s efforts are moving in the direction of strengthening derivatives regulations.

The relevant market in this respect cannot be limited to Europe alone. The outlook has to be global. Given the current balance of power in the world, the European Commission’s mistrust of entities that could be European champions is undoubtedly detrimental.

The economic and financial crisis has shown that Europe needs to seek two objectives: on the one hand, to ensure that the financial system serves the real economy and on the other, to strengthen Europe’s voice in the international arena.

These two objectives can be achieved only if we prove ourselves capable of protecting and strengthening Europe’s competitive advantages and if we create stable, transparent and solid economic and financial infrastructures capable of financing the European economic recovery.

Established in Europe, this structure could have been effectively supervised by European regulators, which would have boosted market security and stability.

The merger of Deutsche Börse and NYSE Euronext would have offered a unique opportunity to create a platform in Europe and would have helped us achieve our goals of enhancing the security and stability of European financial markets. That would have made Europe more competitive as a financial centre and would certainly have given European companies easier access to liquidities in today’s context of tight capital, which jeopardises the relaunch of the European economy.

(*) Jean-Paul Gauzès is a French EPP member of the European Parliament