Assistant Attorney General Makan Delrahim of the Antitrust Division of the U.S. Department of Justice issued the following statement today in connection with the closing of the division’s investigation into the proposed acquisition of Refinitiv by the London Stock Exchange Group (LSEG):
“After an extensive review of the proposed transaction, the Antitrust Division determined that the combination of LSEG and Refinitiv is unlikely to result in harm to competition or American consumers.”
LSEG, headquartered in London, operates the London Stock Exchange, the Italian stock exchange, Borsa Italiana, and a number of other trading platforms for trading of stocks, other equity-like exchange traded products, bonds and derivatives. LSEG offers indexes such as the FTSE 100 and Russell 2000, analytical tools, and data solutions through its FTSE Russell business.
Refinitiv, headquartered in New York City, is one of the main providers of financial markets data and infrastructure. Refinitiv offers consolidated real-time and non-real time data feeds of stocks and other discrete content, and desktop solutions and terminals for financial industry professionals. It also supplies foreign exchange benchmarks and controls several electronic trading venues in various asset classes.
In August 2019, LSEG and Refinitiv announced that LSEG had reached an agreement to acquire Refinitiv in a transaction valued at approximately $27 billion. Following that announcement, the Antitrust Division conducted a comprehensive eight-month investigation, during which it reviewed documents, analyzed data, and interviewed industry participants.
In conducting its analysis, the Division considered the vertical relationships between LSEG and Refinitiv where one firm serves as a supplier to the other of needed inputs, as well as the horizontal aspects of the transaction where LSEG and Refinitiv offer competing products. In analyzing these different aspects to the transaction, the Division used both the recently released Vertical Merger Guidelines and the Horizontal Merger Guidelines, issued by the Antitrust Division and the Federal Trade Commission.
When analyzing the vertical aspects of the transaction, the division considered how the proposed transaction could affect the ability and incentives of LSEG and Refinitiv to change the licensing terms for proprietary data feeds used by their rivals to supply products that compete against similar products from LSEG and Refinitiv. Examples of such data feeds include pricing data for financial instruments, currency benchmark rates, and securities identifiers.
The division’s analysis considered how changes in the licensing of LSEG’s and Refinitiv’s proprietary data feeds could affect competition for financial indexes and financial data products, and found that the proposed transaction is unlikely to significantly lessen competition for those products where rivals rely on LSEG and Refinitiv for inputs. In many instances, for example, the rivals who purchase products and services from LSEG or Refinitiv also sell products and services back to LSEG and Refinitiv. The division’s analysis took into account the competitive significance in the United States of LSEG’s and Refinitiv’s products compared to their rivals’ products, and the bargaining relationships these rivals have with LSEG and Refinitiv. The division’s analysis also considered the possible competitive effects of the proposed transaction on customers in the United States of LSEG, Refinitiv, and their rivals. Because LSEG and Refinitiv’s rivals would maintain significant bargaining leverage that would make post-transaction price increases unlikely, and because any potential increase in the fees of the combined firm would not likely be passed on to customers, the division concluded the vertical aspects of the transaction would not cause a significant lessening of competition.
With respect to the horizontal aspects of the transaction, the division found that in areas where LSEG and Refinitiv offer similar products, such as financial indexes, that the combination of the companies’ products are unlikely to significantly lessen competition. This analysis was based on a review of LSEG’s and Refinitiv’s products that are similar to each other, an analysis of whether these products actually compete against each other in the United States, and the small changes the transaction would likely cause in post-transaction market concentration for these products based on the companies’ market shares in the United States.
The division considered several theories of harm in its review of the proposed transaction, and concluded that these theories were not supported by the available evidence. For these and other reasons, the division determined that the proposed transaction is unlikely to substantially harm consumers in the United States and therefore closed its investigation.