UK competition authority approves LSEG acquisition of Quantile
27 October 2022 UK
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The UK Competition and Markets Authority (CMA) has approved London Stock Exchange Group’s (LSEG’s) proposed purchase of Quantile Group.
The deal, which was first announced in December 2021, was referred by the CMA for additional investigation by an independent group of CMA Panel members after identifying competition concerns during the first phase of its inquiry.
Specifically, the CMA identified concerns during its Phase 1 review that LCH’s acquisition of Quantile could disadvantage third-party compression providers that provided competing services, thereby leading to reduced competition in this segment of the UK market.
Following the Phase 2 inquiry, which was conducted in May 2022, the CMA has concluded that the deal does not present substantial competition concerns in the UK. This investigation was based on detailed engagement with LSEG and Quantile customers, and with third-party compression vendors, alongside a more detailed evaluation of the proposed acquisition.
“Although the evidence showed that LSEG may have the ability to disadvantage Quantile’s rivals post-merger, the investigation found LSEG would not have the commercial incentive to do so as its customers were clear they could take steps to stop such efforts,” explains the CMA.
Martin Coleman, chair of the CMA independent inquiry group comments: “The in-depth investigation and consultation allowed us to engage extensively with LSEG, Quantile, and their customers and competitors, enabling us to better understand the impact of the transaction on those businesses and the market.
“On the basis of that engagement, and other evidence we have gathered, we are satisfied that this deal will not worsen the options available to businesses and consumers. As such, the transaction can go ahead.”
Founded in 2015, Quantile is a London-based provider of trade compression and portfolio, margin and capital optimisation services.
On announcing the proposed acquisition on 6 December 2021, LSEG stated that the transaction will enable the stock exchange group to extend its post-trade risk management solutions in these areas, complementing its existing range of global OTC derivatives clearing services.
LSEG indicated at this time that it has agreed to pay a maximum aggregate consideration of up to £274 million to Quantile shareholders, subject to customary adjustments.
It declared that Quantile’s services will be available through an “open model approach” that will offer customers a choice of where to clear, compress and optimise their trading activity. LSEG has proposed that, following the transaction, Quantile will remain a standalone entity within its post-trade division.
The deal, which was first announced in December 2021, was referred by the CMA for additional investigation by an independent group of CMA Panel members after identifying competition concerns during the first phase of its inquiry.
Specifically, the CMA identified concerns during its Phase 1 review that LCH’s acquisition of Quantile could disadvantage third-party compression providers that provided competing services, thereby leading to reduced competition in this segment of the UK market.
Following the Phase 2 inquiry, which was conducted in May 2022, the CMA has concluded that the deal does not present substantial competition concerns in the UK. This investigation was based on detailed engagement with LSEG and Quantile customers, and with third-party compression vendors, alongside a more detailed evaluation of the proposed acquisition.
“Although the evidence showed that LSEG may have the ability to disadvantage Quantile’s rivals post-merger, the investigation found LSEG would not have the commercial incentive to do so as its customers were clear they could take steps to stop such efforts,” explains the CMA.
Martin Coleman, chair of the CMA independent inquiry group comments: “The in-depth investigation and consultation allowed us to engage extensively with LSEG, Quantile, and their customers and competitors, enabling us to better understand the impact of the transaction on those businesses and the market.
“On the basis of that engagement, and other evidence we have gathered, we are satisfied that this deal will not worsen the options available to businesses and consumers. As such, the transaction can go ahead.”
Founded in 2015, Quantile is a London-based provider of trade compression and portfolio, margin and capital optimisation services.
On announcing the proposed acquisition on 6 December 2021, LSEG stated that the transaction will enable the stock exchange group to extend its post-trade risk management solutions in these areas, complementing its existing range of global OTC derivatives clearing services.
LSEG indicated at this time that it has agreed to pay a maximum aggregate consideration of up to £274 million to Quantile shareholders, subject to customary adjustments.
It declared that Quantile’s services will be available through an “open model approach” that will offer customers a choice of where to clear, compress and optimise their trading activity. LSEG has proposed that, following the transaction, Quantile will remain a standalone entity within its post-trade division.
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