Thomson's bid for Reuters faces EU antitrust investigation
The EU's executive arm said that its initial investigation saw problems with the combination because both companies supply data feeds to traders, control news services and have access to broker research reports as well as financial information databases that they sell to their customers.
The two companies said in a statement that they would keep working with the Commission "to help narrow and resolve the issues which the EC has indicated require further review."
Thomson's bid for Reuters Group PLC would cut the number of major companies selling information and trading systems to the financial services industry from three -- Reuters, Thomson and privately owned Bloomberg LP -- to just two.
The Commission has until Feb. 25 to decide whether to clear or block the deal. It rarely stops takeovers from going ahead, usually asking companies to consider selling off units or make binding promises on how they do business to eliminate antitrust concerns.
EU regulators said they would investigate if joining two leading providers of financial data would be likely to cause antitrust problems.
"This may have an impact on other providers of financial information which integrate the financial products concerned into their own offerings, as well as on financial institutions and final customers of such products," they said.
Apart from EU assent, the deal also needs approval from antitrust bodies in both Britain and the United States.
Thomson and Reuters said they have signed a timing agreement with the U.S. Department of Justice which will give the two companies a decision by Jan. 15, 2008.
"Today's developments bring clarity and transparency to the regulatory timetables on both sides of the Atlantic," said Reuters Chief Executive Tom Glocer, who is CEO-designate of Thomson-Reuters.
He said the companies hoped to complete the transaction "in or around the first quarter of 2008."
The combination of Reuters, founded when Paul Julius Reuter began transmitting stock market quotations between London and Paris via the new Calais-Dover cable in 1851, and relative newcomer Thomson would generate sales in excess of $11 billion and just nudge past Bloomberg by market share.
Reuters' market share of 23 percent and Thomson's 11 percent would combine for a total Thomson-Reuters Corp. share of 34 percent, according to April figures from Inside Market Data Reference. Bloomberg, founded by New York City Mayor Michael Bloomberg, has a 33 percent share.
Reuters and Thomson share the midlevel market for trading customers and could argue that the deal would leave them better placed to compete with Bloomberg for higher-end customers where that company currently dominates.
London-based Reuters is also more focused on Europe, while Canada's Thomson is stronger in North America.
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