By Foo Yun Chee and Andreas Kröner
BRUSSELS/FRANKFURT (Reuters) - EU antitrust regulators warned on Wednesday that Deutsche Boerse's (DE:DB1Gn) proposed $28 billion merger with the London Stock Exchange (L:LSE) could hinder competition in key financial market activities.
The European Commission said it would investigate over the next four months whether the deal would also sharply reduce competition in German equity trade and create a near-monopoly in single stock equity futures and options based on Italian shares.
Deutsche Boerse and the London Stock Exchange, which had anticipated the EU move, are expected to offer concessions to allay the regulatory concerns, some of which go to the heart of the merger's rationale.
The Commission cited concerns about reduced competition in clearing where the merged company would combine the largest margin pool in the world, worth 150 billion euros ($168 billion), and in derivatives.
"Financial markets provide an essential function for the European economy. We must ensure that market participants continue to have access to financial market infrastructure on competitive terms," European Competition Commissioner Margrethe Vestager said in a statement.
The EU antitrust enforcer will rule on the proposed merger by Feb. 13, a deadline which would be extended once the companies submit concessions.
The merger has already triggered alarm in France, Belgium, Portugal and the Netherlands, trading locations of rival exchange Euronext (PA:ENX).
Industrial lobbying group European Investors Association last month warned of the dangers of a quasi-monopolistic stock market which could dictate listing fees and costs and harm competition.