Merger Update: LSEG/Quantile

CMA provisionally clears LSEG / Quantile merger

CMA has provisionally cleared the anticipated acquisition of Quantile by LSEG following an in-depth merger investigation.

The Competition and Markets Authority (CMA) referred the merger between London Stock Exchange Group (LSEG) and Quantile Group Limited (Quantile) for an in-depth Phase 2 inquiry by a group of independent members of the CMA Panel in May 2022, after identifying competition concerns during an initial Phase 1 review that warranted further investigation.

Following that more detailed Phase 2 investigation, which considers the deal against a higher threshold than phase 1, the CMA has now provisionally concluded that the deal does not raise substantial competition concerns in the UK.

LSEG is an international financial markets infrastructure and data business which holds a majority shareholding in the LCH clearing house group (LCH).  A clearing house helps reduce the costs and risk of a contract between a buyer and a seller in a financial market by acting as a central counterparty between the parties to a transaction.

Quantile helps financial institutions trading in derivative instruments to reduce their capital requirements, along with their overall regulatory costs through services such as multilateral compression. Multilateral compression service providers for interest rate derivatives cleared through LCH depend on LCH to be able to provide these services.

The CMA's Phase 1 review raised concerns that, after the acquisition of Quantile, LCH could potentially disadvantage third party compression providers who are in competition with Quantile, leading to reduced competition.

During the in-depth Phase 2 investigation, the CMA engaged extensively with customers of LSEG, Quantile and with third party compression providers and conducted a more detailed analysis of the anticipated acquisition. Although the evidence showed that LSEG may have the ability to disadvantage Quantile's rivals post-merger, the investigation has provisionally found LSEG would not have the commercial incentive to do so as its customers were clear they could take steps to stop such efforts.

On this basis, the CMA currently considers that the anticipated acquisition will not lead to a substantial lessening of competition between Quantile and its rivals and, therefore, has provisionally concluded that the merger does not raise competition concerns.

Martin Coleman, chair of the CMA independent inquiry group said:

"Our in-depth investigation has allowed us to gather a wide range of evidence to help us better understand the competitive landscape and the views of customers and competitors on the impact of the merger. We are currently satisfied that this deal won't worsen the options available to businesses and consumers. As such we have provisionally concluded that the transaction can go ahead."

The CMA welcomes responses from interested parties to its provisional findings by 5pm on Friday 30^th September 2022. These will be considered ahead of the CMA issuing its final report, which is due by 31 October 2022.

For more information, visit the LSEG/Quantile inquiry page.

Notes to editors

1.    For media enquiries, contact the CMA press office on 0203 738 6460 or [email protected]

2.    A Phase 1 inquiry determines whether there is a realistic prospect that the merger could substantially lessen competition. A Phase 2 inquiry has a different statutory test to Phase 1. Phase 2 determines whether it is more likely than not that a substantial lessening of competition will occur because of the merger - a higher threshold than Phase 1. For this reason, and because phase 2 decisions are taken by a different group of independent decision-makers following a further in-depth review, some transactions will ultimately be cleared at Phase 2 that are not cleared at Phase 1.