CCCS Consults on Proposed Commitments by London Stock Exchange Group plc in relation to the Proposed Acquisition of Refinitiv Holdings Limited

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1. The Competition and Consumer Commission of Singapore (“CCCS”) is inviting public feedback from 27 January 2021 to 9 February 2021 on commitments proposed by London Stock Exchange Group plc (“LSEG”) to address competition concerns identified by CCCS in relation to the proposed acquisition by LSEG of sole control over Refinitiv Holdings Limited (“Refinitiv”) (collectively, the “Parties”) (the “Proposed Transaction”).

Background

2. Following CCCS’s Phase 1 review which concluded on 2 July 2020, competition concerns were raised on the Proposed Transaction based on the information received from the Parties and third parties. CCCS proceeded to an in-depth Phase 2 review on 31 August 2020 to further assess the effect of the Proposed Transaction in view of the concerns raised.^[1]

3. Based on feedback from third parties^[2], CCCS is concerned that the Proposed Transaction will reduce the incentive for the merged entity to continue the supply of Refinitiv’s WM/Reuters foreign exchange benchmarks (“WM/R FX benchmarks”) which are critical inputs to competing providers of index licensing and derivatives clearing services. This is because, as a result of the Proposed Transaction, Refinitiv would be merged or affiliated to a major clearing provider (i.e. LCH Group^[3]) as well as a major index licensing provider (i.e. FTSE Russell^[4]) with global presence.

4. To address these competition concerns, LSEG proposed commitments to make WM/R benchmarks available to all existing and future (a) customers for the purposes of providing index licensing services^[5]; and (b) clearing houses^[6] for providing clearing services, in Singapore (collectively, “WM/R Customers”) (“Proposed Commitments”).

5. The Proposed Commitments include commitments (a) to ensure that the pricing and other commercial terms that are applied to WM/R FX benchmarks shall not be changed in such a way as to constitute a de facto failure to make WM/R FX benchmarks available to WM/R Customers; (b) not to reclassify or redefine WM/R FX benchmarks in a manner that would undermine the efficacy of the Proposed Commitments; and (c) to deal with WM/R Customers in relation to any future contracts regarding access to WM/R FX benchmarks for index licensing or clearing purposes in good faith.

6. LSEG has proposed a commitment period of ten years from the date of CCCS’s final decision on the Proposed Transaction, during which the Proposed Commitments will be in effect. A Monitoring Trustee will be appointed to monitor compliance with the commitments, including to assess all complaints regarding a potential breach of the commitments.^[7]

Public Consultation

7. CCCS is inviting feedback on the Proposed Commitments at Annex 1 to assist with its assessment of whether the Proposed Commitments will sufficiently address the competition concerns arising from the Proposed Transaction. The closing date for submissions is 12.00 pm on 9 February 2021. If the submission/correspondence contains confidential information, please also provide CCCS with a non-confidential version of the submission or correspondence. CCCS will issue its decision relating to the Proposed Transaction, alongside with its decision on the Proposed Commitments, following the public consultation.

8. More information on the Proposed Transaction can be accessed from the CCCS website at www.cccs.gov.sg under the section “Public Consultation”.

9. For more information on the merger review process in Singapore, please refer to Annex 2.

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About the Competition and Consumer Commission of Singapore

The Competition and Consumer Commission of Singapore (“CCCS”) is a statutory board of the Ministry of Trade and Industry. CCCS administers and enforces the Competition Act (Cap. 50B) which empowers CCCS to investigate and adjudicate anti-competitive activities, issue directions to stop and/or prevent anti-competitive activities and impose financial penalties. CCCS is also the administering agency of the Consumer Protection (Fair Trading) Act (Cap. 52A) or CPFTA which protects consumers against unfair trade practices in Singapore. Our mission is to make markets work well to create opportunities and choices for business and consumers in Singapore.

For more information, please visit www.cccs.gov.sg.

ANNEX 2

About the Section 54 Prohibition under the Competition Act & Merger Procedures

Section 54 of the Competition Act (Cap. 50B) (“the Act”) prohibits mergers that have resulted, or may be expected to result, in a substantial lessening of competition in Singapore. CCCS is generally of the view that competition concerns are unlikely to arise in a merger situation unless:

• The merged entity has/will have a market share of 40% or more; or

• The merged entity has/will have a market share of between 20% to 40% and the post-merger combined market share of the three largest firms is 70% or more.

Merging entities are not required to notify CCCS of their merger but they should conduct a self-assessment to ascertain if a notification to CCCS is necessary. If they are concerned that the merger has infringed, or is likely to infringe, the Act, they should notify their merger to CCCS. In such cases, CCCS will assess the effect of the merger on competition and decide if the merger has resulted, or is likely to result, in a substantial lessening of competition (“SLC”) in Singapore.

Separately, CCCS has the ability to conduct an investigation into an un-notified merger if there are reasonable grounds for suspecting that the merger infringes section 54 of the Act. In the event CCCS finds that a merger situation has resulted or is expected to result in an SLC, CCCS has powers to give directions to remedy the SLC. For example, CCCS can require the merger to be unwound or modified to address or prevent the SLC, as the case may be. CCCS may also consider issuing interim measures prior to the final determination of the investigation.

Phase 1 and Phase 2 Merger Review

A Phase 1 review entails a quick review and allows merger situations that do not raise competition concerns under the section 54 prohibition to proceed. CCCS expects to complete a Phase 1 review within 30 business days. By the end of this period, CCCS will determine whether to issue a favourable decision and allow the merger situation to proceed. If CCCS is unable, at the end of the 30-day period, to conclude that the merger situation will not result in a substantial lessening of competition, CCCS will inform the merger parties and the merger parties may file further information and supporting documents as listed in Form M2^[8]. Upon receipt of Form M2, CCCS will proceed to a Phase 2 review.

A Phase 2 review entails a more detailed and extensive examination of the merger situation. While the principles of substantive assessment are the same, CCCS will require access to more extensive and detailed information regarding the merger parties and the markets in question.

As the Phase 2 review is more complex, CCCS will endeavour to complete a Phase 2 review within 120 business days.

Commitments

Section 60A of the Act states that CCCS may, at any time before making a decision as to whether the section 54 prohibition has been or will be infringed, accept commitments that remedy, mitigate or prevent the substantial lessening of competition or any adverse effect arising from the merger situation. Where CCCS has accepted a commitment, CCCS will make a favourable decision.

Further details can be found in the CCCS Guidelines on Merger Procedures 2012.

For more information, please visit www.cccs.gov.sg.

^[1] For more information on the Phase 1 review, please refer to CCCS’s media release dated 2 July 2020. For more information on the Phase 2 review, please refer to CCCS’s media release dated 16 September 2020.

^[2] Third parties have raised concerns about continued access to WM/R FX benchmarks, which are considered critical inputs for index licensing and derivatives clearing services. Feedback suggests that WM/R FX benchmarks are considered the industry benchmark for foreign exchange reference rates and there is no reasonable substitute that rival providers and derivatives clearing service providers can switch to without incurring significant disruption and costs to their businesses.

^[3] LSEG has a majority ownership interest in LCH Group, a holding company of two separate multi-asset class global clearing house operators with an open access model (i.e. LCH Ltd and LCH SA).

^[4] FTSE Russell is a wholly owned subsidiary of LSEG which supplies over approximately 250,000 indices, which are grouped into more than 200 index families, based on different exposures such as geographies, sectors, and asset classes, and other classifications such as size and style.

^[5] The index licensing providers refer to those which provide index licensing services from Singapore for users globally; or to users resident in or operating a business in Singapore.

^[6] The clearing houses have to be approved or recognised by Monetary Authority of Singapore under Section 51(1)(a) or Section 51(1)(b) of the Securities and Futures Act, Chapter 289 of Singapore.

^[7] Aside from the complaint channel, there is a fast-track dispute resolution mechanism, which is an additional option for complainants to seek recourse under the Proposed Commitments, failing which the complainant may request arbitration.

^[8] The form can be accessed at www.cccs.gov.sg/approach-us/businesses/notify-a-merger/merger-notification-procedures/.