May urged to probe stock exchange takeover bid
THERESA May faces mounting pressure to investigate a German takeover of the London Stock Exchange after European watchdogs began a probe into the deal.
Authorities on the continent fear the institution’s planned £21billion merger with Deutsche Boerse could damage competition and harm rival firms.
The European Commission has now launched a detailed investigation in an attempt to understand exactly what the economic impact would be. However the British government has so far refused to examine the deal – which critics warn is not in the national interest.
Campaigners yesterday called for the Prime Minister to act on her promises of a new industrial strategy – and block the takeover if it does not work in Britain’s favour.
John Longworth, former head of the British Chambers of Commerce, said: ‘Our largest stock exchange is being sold to a foreign company without any inquiry. Competition authorities and the Government should look into it.
‘Having stated the Government will take a different view of this sort of thing, this is an early test for Mrs May.’
Labour MP John Mann, a member of the influential Treasury Select Committee, said: ‘There’s a serious question about the viability of this merger. Of course the Government should look into it – it’s not in the national interest.’
Earlier this week, European commissioner Margrethe Vestager said she was concerned the deal could break rules designed to prevent monopolies.
The Commission said there were risks to competition in several areas of financial markets, including clearing and trading in complex investments such as derivatives and exchange traded funds.
Deutsche Boerse and the London Stock Exchange both have massive business in areas which are of key concern for regulators. Miss Vestager said: ‘Financial markets provide an essential function for the European economy.
‘We must ensure that market participants continue to have access to infrastructure on competitive terms. We have opened an investigation to assess the proposed merger.’
February 13 has been set as the cut-off date for the probe, but this could be extended to April.
The deal was waved through by shareholders on both sides, and was described as a merger of equals. But Deutsche’s shareholders would get a controlling stake, its chief executive Carsten Kengeter would run the business and profits would be reported in euros.
Alongside the competition concerns, British critics fear this would essentially place a critical national institution in foreign hands.
Tory grandee Sir Bill Cash has repeatedly called for Business Secretary Greg Clark to block the deal under the 2002 Enterprise Act – which allows him to intervene if it is not in the public interest. Sir Bill said earlier this week: ‘There’s so much uncertainty about this – it raises serious questions about mergers, acquisitions and competition policy.’
Mrs May has not spoken publicly about the merger, but she is known to favour a more interventionist approach on foreign takeovers.
While campaigning to become Prime Minister, she referred in a speech to US firm Pfizer’s failed attempt to take over British drug maker AstraZeneca. ‘A proper industrial strategy wouldn’t automatically stop the sale of British firms to foreign ones,’ she said.
‘But it should be capable of stepping in to defend a sector that is important to Britain.’
‘Not in national interest’