EU Commission: Banking and energy conglomerates don’t threaten competition!

Joaquín Almunia, Vice-President of the EC in charge of Competition, gave a press conference announcing the EC decision to impose fines to Lundbeck and other pharma companies for delaying market entry of generic medicines. (EC Audiovisual Services, 19/6/2013)

Joaquín Almunia, Vice-President of the EC in charge of Competition, gave a press conference announcing the EC decision to impose fines to Lundbeck and other pharma companies for delaying market entry of generic medicines. (EC Audiovisual Services, 19/6/2013)

At a time when the financial sector in the eyes of the wider public all over the world, and more so in Europe and the US, is to be held responsible for the real economy crisis and the unemployment burst, the European Commission dares to approve the acquisition of NYSE-Euronext (NYX) by the InterContinental Exchange. For one thing it is revealing that this acquisition was not the other way around.

NYSE-Euronext owns the many centuries old stock exchanges of New York, Paris, Amsterdam, Brussels, Lisbon and the London NYSE Liffe market. Liffe specialises in European financial derivatives, while the buyer, ICE, has a history of only thirteen years founded in 2000 and now trading in energy and commodity derivatives. It recently extended its business in the lucrative US financial derivatives market. We will see why ICE bought the NYX and not the other way around. It is also interesting to note that the EU Commission’s green light for this acquisition doesn’t pose any condition as it usually happens.

Globalisation oligopolies

Unquestionably this business move can be seen in the context of the fast globalisation of key market and clearing platforms which obtain now planetary dimensions. The new NYSE-Euronext/ICE exchange will be third in the world after the Hong Kong Exchanges and Clearing & CME. The three of them are managing the bulk of the global derivatives markets the depth of which is impossible to estimate but it may be as high as $600 trillion. Those derivative markets are totally unregulated and no authority has any control on them. They are free to send us all to a new crisis whenever they like.

No conditions at all

The EU Commission’s decision to clear this acquisition without any condition is in sheer contradiction with another Commission initiative, to create a transparent platform for financial products trading in the EU. It is as if the Commission on the one hand is trying to protect the EU citizens from financial exploitation and on the other to allow the formation of a huge international derivatives trading group, a constant threat for the global economy.

According to the decision {“The Commission’s investigation found that the proposed transaction would not raise competition concerns in any of these fields: canola and rapeseed, cocoa, coffee, sugar derivatives and US equity index derivatives, barley, corn and milling wheat, foreign exchange derivatives and bond trading}”.
Why? Because the Commission found that NYX and ICE are offering contracts belonging to different product markets, so their activities do not overlap.

This is almost true. The NYX is specialising in European financial products that is derivatives of stocks, bonds, including futures and options based on short-term interest rates, individual shares, equity indices, swaps, government bonds and only a small range of soft and agricultural commodities (cocoa, coffee, sugar).

At the same time the ICE is basically an American commodity exchange offering derivatives and clearing platforms for agricultural produce, credit, currency, emissions, energy and equity index products. As a result there is only limited overlapping between NYX and ICE business in the agricultural products sector. This overlapping may have created breaches of fair competition conditions but still the EU decision says, “The Commission examined in particular the effects of the proposed acquisition on competition in the markets for the provision of trading and clearing services for certain exchange traded derivatives (“ETDs”), in particular agricultural (canola and rapeseed) and soft commodities derivatives and US equity index derivatives. The Commission’s investigation found that the proposed transaction would not raise competition concerns in any of these fields”.

Yes but what about the forest?

The Commission may be right that in those particular derivative markets the overlapping cannot create a threat to competition. However the issue is not that. There is nowhere in the Commission’s decision the slightest reference to the possible effect on the real economy markets from this acquisition that will create a huge new derivatives provider and clearing platform. The Commission pretends it sees only the trees and not the forest. The very business logic of ICE is to grow through acquisitions. It started as an energy derivatives market and gradually it became a world player extending its business to agricultural products, US shares and bonds, money trading and futures.

Of course this ICE group did not make this wonderful career alone. How could it? According to market sources behind it there are powerful names like Goldman Sachs, Morgan Stanley, British Petroleum, Total, Shell, Deutsche Bank and Société Générale. Those are the real forces behind the ICE and that is why it bought the NYX and not the other way around.

Given that those banking and energy firms practically control large parts of the entire western financial and energy markets there is an obvious and huge threat to fair completion. If they decide to sit for a few hours in the same table, with people from the other one or two major western banking and real economy consortia, they can set prices in many real economy markets like energy, agricultural goods and even shares and bonds.

In the Commission’s decision there is not the slightest reference to that. Not a word about the possibility that this new huge group of NYX-ICE may control the price of oil, oil products, basic agricultural raw materials, stocks, bonds and other real and financial economy products through the manipulation of derivative trading on those real values. This is the core reality of our brave new world’s economic and financial system, where a handful of American and European giants in the banking and the energy sectors control everything. Despite that, the Commission sees no breach of fair competition legislation in this new acquisition.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Security Union: Commission receives mandate to start negotiating international rules for obtaining electronic evidence

4 things ISPs can do to reduce the impact of cybercrime

‘Global clarion call’ for youth to shape efforts to forge peace in the most dangerous combat zones

World Retail Congress Dubai 2016: Retail’s night of nights

EU car manufacturers worry about an FTA with Japan

To build cities fit for the future, we need to think differently

Atomic agency cites concerns over Iran testing sites, offers COVID-19 assistance

Our idea of what makes a company successful needs to change. And it starts with making waste expensive

New UN rights report paints bleak picture in eastern DR Congo

I accidentally went viral on TikTok. I learned we failed our youngest generation.

€200 million to promote European agri-food products in and outside the EU

COP21 Breaking News_12 December: Another sleepless night for the negotiators before Indaba meeting

Coronavirus: Commission starts testing interoperability gateway service for national contact tracing and warning apps

Social Entrepreneurship in the times of the refugee crisis

World Refugee Day, 20 June 2020: Joint Statement by the European Commission and the High Representative

President Juncker temporarily transfers portfolio responsibilities following departure of two Members of the European Commission

How does your immune system work?

Blockchain could boost global trade by $1 trillion

Here’s how sustainability can make you stand out from the crowd

Sustainable finance: Commission welcomes deal on an EU-wide classification system for sustainable investments (Taxonomy)

Brexit: MEPs concerned over reported UK registration plans for EU27 citizens

COP21 Breaking News_04 December: Building a Sustainable Future – speech by UNEP Deputy Executive Director Ibrahim Thiaw at the LPAA Thematic Event on Buildings

Green deal for Europe: First reactions from MEPs

Forests ‘essential’ for the future, UN agriculture chief spells out in new report

‘From farm to plate’, first-ever World Food Safety Day demonstrates the need to take unsafe food off the menu

Young migrants: Is Europe creating a lost generation?

WHO and IFMSA as transcendent pillars for world improvement

It’s time we took a seat ‘at your table’: Guterres calls on world youth to keep leading climate emergency response

New VAT rules in the EU: how a digital sea could have become an ocean

How ‘small’ is Europe in Big Data?

Oslo leads the way in ‘Breathe Life’ campaign for cleaner cities in climate change era

“One Belt One Road”: Its relevance to the European Companies

Parliament elects Ursula von der Leyen as first female Commission President

Dieselgate: Parliament calls for mandatory retrofits of polluting cars

How AI and satellite imaging can stamp out modern slavery

The future of science could be in your gut. Here’s why

As human caravan moves through Mexico, ‘full respect’ needed for national control of borders: UN chief

Transport Committee approves major reform of road transport sector

EU and African leaders to jointly tackle the migration crisis across the Mediterranean

Is “Sustainable Development” a concept that integrates Health Literacy and Health Policy as a global health action?

G20 LIVE: G20 Antalya Summit in Numbers, 15-16 November 2015

From the Field: Women push for peace

‘A new chapter’ dawns for democracy in Guinea-Bissau: top UN official

EU-US trade talks go ahead despite Prism and civil rights breach

We finally have a life-saving vaccine for Ebola

This Filipino journalist is fighting for press freedom in COVID-19 lockdown

Microsoft’s YouthSpark: a kiss of Life to European Youth from the European Parliament

8 amazing facts to help you understand China today

COVID-19 has accelerated India’s digital reset

The UN came of age with the nuclear bomb. Time for it to step up to the AI era

How technology can help us achieve universal healthcare

Inclusion, empowerment and equality, must be ‘at the heart of our efforts’ to ensure sustainable development, says UN chief

European Vocational Skills Week: ‘VET for Green and Digital Transitions’

More accessible products and services for disabled and elderly people

‘Health is a right, not a privilege’ says WHO chief on World Health Day

Western Balkans: MEPs take stock of 2018 progress

Despite setbacks, ‘political will’ to end Yemen war stronger than ever: top UN envoy

Why Renewable Energy is an attractive investment

State aid: Commission approves €200 million Danish loan in support of the Travel Guarantee Fund for travel cancellations due to coronavirus outbreak

Mental Health: In Times of COVID-19

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s