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Deutsche Börse disputes NYSE merger veto

German stock market operator Deutsche Börse said on Monday it would challenge a European Union veto against a merger with NYSE Euronext that would have created the world's largest exchange operator.

Deutsche Börse disputes NYSE merger veto
Photo: DPA

“Deutsche Börse will file charges at the European Union court in Luxembourg,” the company said in a statement, referring to the European Court of Justice, while adding that “several aspects of the decision” by the European Commission were “incorrect”.

Last month the companies cancelled their mega-merger after European regulators vetoed their plan to create the world’s largest exchange operator over concerns it would potentially dominate the global derivatives trade.

In the February decision, the European Commission said it had “no alternative” but to veto the transatlantic tie-up, billed as a merger but which would have left the German side dominant in the combined company.

The commission had expressed worries that the venture would have had monopolistic power in certain derivatives trading, but NYSE Euronext and Deutsche Börse refused recommendations to divest some of the business that the merger would have covered.

At the time of the veto, Deutsche Börse said the decision by Brussels showed the EU was “out of touch with reality” and NYSE Euronext said the veto was “based on a fundamentally different understanding of the derivatives market”.

In pursuing the deal, the two had to fend off a competing $11.3 billion bid by the Nasdaq and ICE exchanges for NYSE Euronext, which they had said valued NYSE Euronext at nearly 20 percent more than the German suitor’s valuation.

But that higher valued bid was ultimately scotched when US regulators signaled they would oppose it on anti-trust grounds.

AFP/mw

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ECONOMY

German consumer prices set to rise steeply amid war in Ukraine

Russia's war in Ukraine is slowing down the economy and accelerating inflation in Germany, the Ifo Institute has claimed.

German consumer prices set to rise steeply amid war in Ukraine

According to the Munich-based economics institute, inflation is expected to rise from 5.1 to 6.1 percent in March. This would be the steepest rise in consumer prices since 1982.

Over the past few months, consumers in Germany have already had to battle with huge hikes in energy costs, fuel prices and increases in the price of other everyday commodities.

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With Russia and Ukraine representing major suppliers of wheat and grain, further price rises in the food market are also expected, putting an additional strain on tight incomes. 

At the same time, the ongoing conflict is set to put a dampener on the country’s annual growth forecasts. 

“We only expect growth of between 2.2 and 3.1 percent this year,” Ifo’s head of economic research Timo Wollmershäuser said on Wednesday. 

Due to the increase in the cost of living, consumers in Germany could lose around €6 billion in purchasing power by the end of March alone.

With public life in Germany returning to normal and manufacturers’ order books filling up, a significant rebound in the economy was expected this year. 

But the war “is dampening the economy through significantly higher commodity prices, sanctions, increasing supply bottlenecks for raw materials and intermediate products as well as increased economic uncertainty”, Wollmershäuser said.

Because of the current uncertainly, the Ifo Institute calculated two separate forecasts for the upcoming year.

In the optimistic scenario, the price of oil falls gradually from the current €101 per barrel to €82 by the end of the year, and the price of natural gas falls in parallel.

In the pessimistic scenario, the oil price rises to €140 per barrel by May and only then falls to €122 by the end of the year.

Energy costs have a particularly strong impact on private consumer spending.

They could rise between 3.7 and 5 percent, depending on the developments in Ukraine, sanctions on Russia and the German government’s ability to source its energy. 

On Wednesday, German media reported that the government was in the process of thrashing out an additional set of measures designed to support consumers with their rising energy costs.

The hotly debated measures are expected to be finalised on Wednesday evening and could include increased subsidies, a mobility allowance, a fuel rebate and a child bonus for families. 

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

In one piece of positive news, the number of unemployed people in Germany should fall to below 2.3 million, according to the Ifo Institute.

However, short-time work, known as Kurzarbeit in German, is likely to increase significantly in the pessimistic scenario.

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