Affected market: Securities trading
No. ME/1113/04
Please note that the full text of the decision can be downloaded by using the link on the right of this page. What follows are extracts regarding the parties, the transaction, jurisdiction, assessment and decision.
The OFT's decision on reference under section 22 (1) given on 23 July 2004
Please note that square brackets indicate information excised, or exact figures replaced by a range, at the parties' or third parties' request.
PARTIES
The Thomson Corporation (Thomson) is a provider of integrated information solutions to business and professional customers in four market groups: Legal & Regulatory, Learning, Scientific & Healthcare and Financial. Through Omgeo LLC (Omgeo), its 50/50 joint venture with the Depository Trust & Clearing Corporation (DTCC), Thomson provides post-trade pre-settlement processing services for equities and fixed-income securities.
TradeWeb Group LLC (TradeWeb) was founded and operated as a joint venture between investment banks and other investors (see note 1) to provide an electronic trading platform for fixed income securities.
TRANSACTION
Thomson has acquired TradeWeb for $385 million in cash plus substantial contingency payments. The transaction was announced on 8 April 2004 and completed on 21 May 2004. The 40-day administrative deadline expires on 23 July 2004.
JURISDICTION
Thomson and TradeWeb have ceased to be distinct enterprises. They overlap in post-trade processing of fixed income securities and the share of supply test in section 23 of the Enterprise Act 2002 (the Act) is met. The OFT therefore believes that it is or may be the case that a relevant merger situation has been created.
ASSESSMENT
The parties overlap in the supply of post-trade (pre-settlement) processing (PTP) services for fixed income securities (FIS) trading. The increment is minimal, and the level of competition between the parties is slight. Although conceivable that TradeWeb would have expanded its presence and competed more substantially absent the merger, the evidence supporting this is no more than speculative.
As trade execution and PTP services are highly complementary, third parties have raised a variety of foreclosure concerns. The evidence gathered does not support the proposition that Thomson has either the ability or incentives to foreclose rivals, in particular, by tying access to Omgeo's PTP services to TradeWeb's trade execution platform.
Consequently, the OFT does not believe that it is or may be the case that the merger has resulted, or may be expected to result, in a substantial lessening of competition within a market or markets in the United Kingdom.
DECISION
This merger will therefore not be referred to the Competition Commission under section 22 (1) of the Enterprise Act.
NOTES
1. TradeWeb's equity owners were: CSFB [ ], Goldman Sachs [ ], Lehman Brothers [ ], Citigroup [ ], Merrill Lynch [ ], JP Morgan [ ], Deutsche Bank [ ] and Morgan Stanley [ ].
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