Appealing to the Luxembourg-based EU courts can be attractive for various
reasons. First, it costs relatively little. Second, the courts often
challenge regulators’ methodology and processes: many cartel fines, for
example, are tweaked on appeal, and only this month, Dutch bank ING usefully
overturned a state aid ruling.
Third, points of principle can be worth contesting – witness Microsoft’s
appeal over licensing terms. Finally, an appeal can be cathartic when
reputations have been bruised. The big downside is that challenges usually
take several years. So the immediate practical impact is limited.
Procedural flaws
Deutsche Börse is the latest to tread this route, having been thwarted over
its planned mergerwith US-based NYSE Euronext. Most of the above reasons to
appeal seem to apply. Compared with the parties’ combined fees, estimated at
about €150m, an appeal will cost peanuts.
There is an important principle at stake: whether the huge over-the-counter
market acts as a competitive check on exchange-traded derivatives business –
potentially critical for future industry consolidation. (The exchanges
argued that it does: Brussels thought not). And, there is the possibility
that the courts will find that the regulators were guilty of procedural
flaws, making a compensation claim possible. True, appeals in EU merger
cases are rare – but that is because there have only been four blocks in
eight years.
Slow burner
Deutsche Börse’s appeal appears to be unilateral; in truth, NYSE has yet to
decide, although a desire to move on from the failed deal may militate
against joint action.
Either way, investors should not get excited: like most legal matters, this
will be a slow burner.
Dit artikel is oorspronkelijk verschenen op z24.nl