Justice scuttles NASDAQ takeover of NY Stock Exchange

U.S. antitrust authorities have scuttled the takeover of the New York Stock Exchange by its rival, the NASDAQ market.

The Department of Justice (DoJ) threatened to file an antitrust lawsuit against Nasdaq and IntercontinentalExchange for NYSE Euronext, leading the companies to abandon their bid on Monday.

DoJ viewed the $11.3 billion bid as creating a “merger to monopoly” situation that could not be easily remedied by the companies divesting from select areas of their core businesses, Assistant Attorney General Christine Varney told reporters.

“This is an industry where there is fierce competition between NYSE and NASDAQ and this merger would have eliminated that competition,” she said.

Listing stock exchanges act as “gatekeepers” to public equity markets and therefore perform a vital economic function, DoJ noted. Varney could not say if the merger was the largest deal blocked by the Obama administration so far.

“The acquisition would have removed incentives for competitive pricing, high quality of service, and innovation in the listing, trading and data services these exchange operators provide to the investing public and to new and established companies that need access to U.S. stock markets,” said Varney in a statement.

“We were prepared to go to court this morning to enjoin the transaction,” Varney told reporters. That fact prompted the companies to withdraw their bid.

NASDAQ CEO Bob Greifeld said “we are surprised and disappointed in the
Antitrust Division’s conclusion.” 

The join bid came in on April 1; it now appears likely that NYSE will instead merge with the German stock exchange Deutsche Boerse AG.