A FEW hours after its decision to block the Deutsche Börse (DB) and NYSE Euronext merger, the European Commission released the details of its ruling (a memo can be found here). The deal’s failure comes down to three disagreements about the competition, actual or potential, between exchanges.The first is whether over-the-counter (OTC) trades indeed compete with exchange-traded derivatives (ETDs). DB and NYSE think they do. If this is right, their joint share (over 90%) in European ETDs looks tiny, as exchange-based trades are a small fraction (around 15%) of the overall derivatives industry.

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UK Only Article:  standard article Issue:  China and the paradox of prosperity Fly Title:  Deutsche Börse and NYSE Euronext Rubric:  What should investors make of faltering merger plans? FOR the chief executives of Deutsche Börse (DB) and NYSE Euronext, this week’s hobnobbing in Davos was strictly business. A $9.5 billion plan to unite the two exchanges was derailed in early December when European Commission staff revealed they were likely to advise blocking it on competition grounds. The exchanges are lobbying hard to persuade the 27 EU commissioners to ignore their staff and approve the deal. A decision is due to be made on February 1st. On the face of it, investors should support the commission’s recommendation to stymie the deal. Its competition wing is mandated to stop mergers that are likely to raise prices, reduce quality or dull innovation. In this case the concern is that the exchanges’ derivatives businesses—DB’s Eurex and NYSE Euronext’s Liffe—would share over 95% of European trading for some assets. There may also be concerns that a merged exchange would be able to …

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UK Only Article:  standard article Issue:  Europe’s rescue plan Fly Title:  Letters Letters are welcome via e-mail to letters@economist.com Robert Gelbard SIR – I was shocked and profoundly embarrassed by the utterly false statement made against me in your article on the International Commission Against Impunity in Guatemala (CICIG) (“Parachuting in the prosecutors”, October 15th). Based on two decades of experience in democratic institution-building, law enforcement and counter-narcotics, I have criticised the overall efforts of Francisco Dall’Anese, who heads CICIG, as being not aggressive enough compared with those of Carlos Castresana, his predecessor, and in light of the dire situation facing Guatemala. Related topicsProtests and demonstrations United Nations Occupy Wall Street Financial services Property industry That is vastly different from your dismaying allegation of “spread(ing) poison”. In fact, I have publicly and repeatedly agreed with Mr Dall’Anese’s position on Carlos Vielmann, a former interior minister. CICIG is a unique and valuable entity in the absence of a functioning Guatemalan justice sector. But …

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