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LONDON — The London Stock Exchange and Deutsche Börse have tried to merge three times since 2000, hoping to create a European stock market heavyweight. And now, after a ruling from European regulators on Wednesday, the third attempt has failed.
The $30 billion merger, announced more than a year ago, would have created Europe’s largest stock market operator by far, leaving the combined company better positioned to compete with American rivals.
But the deal faced a number of questions, particularly after German regulators and politicians balked at the combined exchange having its headquarters in London even as Britain moves forward with plans to leave the European Union.
On Wednesday, the European Commission officially blocked the deal, with Margrethe Vestager, the bloc’s competition commissioner, citing concerns that a merger would create a “de facto monopoly” in the clearing of bonds and fixed-income products.
“As the parties failed to offer the remedies required to address our competition concerns, the Commission has decided to prohibit the merger,” she said.
The rejection came on the day that Britain began the two-year negotiating process for Britain to exit the 28-nation bloc.
While the shape of Britain’s eventual trading relationship with the European Union following the so-called Brexit remains unclear, one thing is certain: The European authorities will maintain jurisdiction over many big mergers, even when they involve companies with headquarters outside the European Union, a category in which the London Stock Exchange will find itself as soon as March 2019.
Though the decision by European regulators ended a monthslong effort to combine the two operators, the announcement itself was widely anticipated.
Last month, the London exchange said that the deal was unlikely to be approved after European regulators — who had opened an investigation in September — unexpectedly added a condition that it sell a majority stake in MTS, an electronic platform for trading European government bonds and other fixed income products.
The London Stock Exchange called the remedy “disproportionate,” arguing that any such sale would set off additional regulatory processes in Europe and the United States, and would be detrimental to its businesses in Italy, where it operates the Borsa Italiana.
German regulators and lawmakers had also become increasingly concerned in recent months about the combined company having its headquarters in London after last year’s referendum in Britain on European Union membership. They have pushed for the headquarters to be in Frankfurt.
Prosecutors in Germany had also opened an inquiry into the timing of the purchase of Deutsche Börse shares by Carsten Kengeter, the Deutsche Börse chief executive who was set to head the combined company. The shares were purchased months before the exchanges announced their merger, but investigators are looking into whether they were secretly in talks at the time of the share purchase.
Joachim Faber, the chairman of Deutsche Börse’s supervisory board, has said the accusations have no basis and Mr. Kengeter has called them “unfounded.”
Deutsche Börse and the London Stock Exchange had hoped to create a potential European champion by combining stock exchanges in Britain, Germany and Italy, as well as several of Europe’s largest clearinghouses. That would have helped the combined company compete with United States rivals like the Intercontinental Exchange, the owner of the New York Stock Exchange, and CME Group, which operates the Chicago Mercantile Exchange, Chicago Board of Trade and the New York Mercantile Exchange.
In seeking approval for the deal, the London Stock Exchange Group agreed in January to sell LCH, the French operating arm of the LCH.Clearnet Group, after saying it was seeking to “address proactively antitrust concerns raised by the European Commission.” The sale was contingent on the approval by European regulators of the Deutsche Börse-London Stock Exchange transaction. .
The Intercontinental Exchange had been seen as a potential rival in the deal for the London Stock Exchange, but it opted in May not to pursue an acquisition. The rejection of the Deutsche Börse merger, however, now raises questions about whether the Intercontinental Exchange would take another look at the London exchange.