United States v. Deutsche Börse AG and NYSE Euronext; Proposed Final Judgment and Competitive Impact Statement, 81968-81978 [2011-33413]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 76, Number 250 (Thursday, December 29, 2011)]
[Notices]
[Pages 81968-81978]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-33413]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Deutsche B[ouml]rse AG and NYSE Euronext; 
Proposed Final Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Stipulation and Competitive Impact Statement have been filed with the 
United States District Court for the District of Columbia in United 
States of America v. Deutsche B[ouml]rse AG and NYSE Euronext, Civil 
Action No. 1:11-cv-02280. On December 22, 2011, the United States filed 
a Complaint alleging that the proposed merger of Deutsche B[ouml]rse AG 
and NYSE Euronext would violate Section 7 of the Clayton Act, 15 U.S.C. 
18. The proposed Final Judgment, filed the same time as the Complaint, 
requires Deutsche B[ouml]rse AG's subsidiary to divest its interest in 
Direct Edge Holdings LLC within two years and to take the necessary 
steps to remove its affiliates from governance of Direct Edge.
    Copies of the Complaint, proposed Final Judgment and Competitive 
Impact Statement are available for inspection at the Department of 
Justice, Antitrust Division, Antitrust Documents Group, 450 Fifth 
Street NW., Suite 1010, Washington, DC 20530 (telephone: (202) 514-
2481), on the Department of Justice's Web site at https://www.usdoj.gov/atr, and at the Office of the Clerk of the United States District Court 
for the District of Columbia. Copies of these materials may be obtained 
from the Antitrust Division upon request and payment of the copying fee 
set by Department of Justice regulations.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, and responses thereto, will be published in the 
Federal Register and filed with the Court. Comments should be directed 
to James J. Tierney, Chief, Networks & Technology Enforcement Section, 
Antitrust Division, United States Department of Justice, 450 Fifth 
Street, NW., Suite 7100, Washington, DC 20530 (202) 307-6640).

Patricia A. Brink,
Director of Civil Enforcement.
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA,
Antitrust Division
U.S. Department of Justice
450 Fifth Street NW., Suite 7100
Washington, DC 20530

Plaintiff,
v.

DEUTSCHE B[Ouml]RSE AG,
Mergenthalerallee 61
65760 Eschborn
Germany

and
NYSE EURONEXT,
11 Wall Street
New York, NY 10005

Defendants.

Case: 1:11-cv-02280
Assigned To: Beryl A. Howard
Date: 12/22/2011
Description: Antitrust

COMPLAINT

    The United States of America, acting under the direction of the 
Attorney General of the United States, brings this civil action 
pursuant to the antitrust laws of the United States to enjoin the 
proposed merger of Deutsche B[ouml]rse AG (``DB'') and NYSE Euronext 
(``NYSE'') and to obtain such other equitable relief as the Court 
deems appropriate. The United States alleges as follows:

NATURE OF ACTION

    1. DB is among the largest operators of financial exchanges in 
the world. While most of its businesses are in Europe, DB, through 
various subsidiaries, is also the largest unitholder of Direct Edge 
Holdings LLC (``Direct Edge''), the fourth-largest operator of stock 
exchanges in the United States. Direct Edge competes head-to-head 
with NYSE and is an exchange innovator, leading in

[[Page 81969]]

technology, pricing, and in the development of exchange models.
    2. NYSE operates some of the oldest, largest, and most 
prestigious stock exchanges in the United States. It stands at the 
center of American financial markets, with its exchanges handling 
roughly a third of the equities traded daily in the United States, 
and considerably more for certain equities and certain times of day. 
NYSE exchanges list the vast majority of the listed exchange-traded 
products, including the majority of exchange-traded funds, and they 
supply key market data to customers making investment decisions.
    3. On February 15, 2011, NYSE and DB agreed to merge in a 
transaction worth roughly $9 billion. NYSE and DB propose to combine 
under a new Dutch holding company (``NewCo''), which would be the 
largest exchange group in the world, with dual headquarters in 
Frankfurt and New York. NewCo would own 100% of NYSE and 31.54% of 
Direct Edge.
    4. The proposed transaction would violate Section 7 of the 
Clayton Act, 15 U.S.C. Sec.  18, because it would substantially 
lessen competition and potential competition in at least three lines 
of commerce in the United States: (a) displayed equities trading 
services; (b) listing services for exchange-traded products 
(``ETPs''), including exchange-traded funds (``ETFs''); and (c) 
real-time proprietary equity data products.

JURISDICTION, VENUE AND COMMERCE

    5. The United States brings this action under Section 15 of the 
Clayton Act, as amended, 15 U.S.C. Sec.  25, to prevent and restrain 
defendants from violating Section 7 of the Clayton Act, as amended, 
15 U.S.C. Sec.  18.
    6. The Court has subject matter jurisdiction over this action 
and the defendants pursuant to Section 15 of the Clayton Act, as 
amended, 15 U.S.C. Sec.  25, and 28 U.S.C. Sec. Sec.  1331, 1337(a), 
and 1345. NYSE and DB provide and sell displayed equity trading 
services and real-time proprietary equities trading data. NYSE also 
provides and sells listing services for exchange traded products. 
Sales of these services in the United States represent a regular, 
continuous, and substantial flow of interstate commerce, and have a 
substantial effect upon interstate commerce.
    7. This Court has personal jurisdiction over each defendant and 
venue is proper in this District under Section 12 of the Clayton 
Act, 15 U.S.C. Sec.  22, and 28 U.S.C. Sec. Sec.  1391(b)(1) and 
(c). Defendants transact business within the District of Columbia. 
DB and NYSE acknowledge personal jurisdiction in this District and 
consent to venue.

DEFENDANTS AND THE TRANSACTION

    8. DB is a German Aktiengesellschaft that operates financial 
exchanges and related businesses in the United States and Europe. It 
generates revenue from, among other things, listing fees, stock 
trading transaction fees, market data licensing fees, and technology 
licensing arrangements. Through its subsidiaries, DB is the largest 
holder of equity in Direct Edge, a leading stock exchange operator 
in the United States. DB owns 50% of the equity and controls 
Frankfurt-based Eurex Group, a leading European derivatives exchange 
operator. DB has announced an agreement to buy the remaining equity 
in Eurex after DB completes its merger with NYSE. Eurex owns 
International Securities Exchange Holdings, Inc. (``ISE''), a 
leading options exchange in New York that also owns a 31.54% equity 
interest in Direct Edge. In 2010, DB's subsidiaries earned 
substantial revenues from sales in the United States.
    9. NYSE is a publicly traded Delaware corporation with its 
principal place of business located in New York, New York. The 
company operates financial exchanges in the United States and 
Europe. In the United States, NYSE operates three stock exchanges: 
(i) the New York Stock Exchange LLC; (ii) NYSE Arca, Inc., an all-
electronic exchange; and (iii) NYSE Amex LLC, an exchange that lists 
the stock of primarily small- and medium-sized companies. NYSE 
generates revenue from, among other things, listing fees, stock 
trading transaction fees, market data licensing fees, and technology 
licensing arrangements. In 2010, NYSE earned over $3 billion in 
total revenues from within the United States.
    10. Direct Edge is a Delaware limited liability company with its 
principal place of business in Jersey City, New Jersey. Direct Edge, 
through its subsidiary Direct Edge Holdings, Inc., owns and operates 
two leading U.S. stock exchanges, EDGA Exchange, Inc. and EDGX 
Exchange, Inc. Direct Edge is majority-owned by a group including 
ISE, Goldman Sachs Group Inc., Citadel Investment Group LLC, and 
Knight Capital Group Inc. ISE owns 31.54% of Direct Edge and holds 
certain key voting and special veto rights, such as the right to 
veto entry by Direct Edge into options trading. ISE also has the 
right to appoint three members to the Direct Edge board of managers 
and one member to each of the corporate boards of EDGA Exchange, 
Inc. and EDGX Exchange, Inc. Goldman Sachs, Citadel, and Knight each 
own 19.9% of Direct Edge. The remaining 8.76% is owned by a group of 
five brokers, including affiliates of JP Morgan Chase & Co. (through 
LabMorgan Corp.), Bank of America (through Merrill Lynch L.P. 
Holdings, Inc.), Nomura Securities International, Inc., Deutsche 
Bank USA (through DB US Financial Markets Holding Corporation), and 
Sun Partners LLC. Direct Edge's exchanges compete head-to-head with 
the NYSE exchanges. In 2010, Direct Edge earned substantial revenues 
in the United States.
    11. DB and NYSE have proposed to merge into a NewCo that will 
house all their current corporate holdings. NewCo will be a Dutch 
holding company, with dual headquarters in New York City and outside 
Frankfurt, Germany. Combined annual net revenues of NewCo are 
expected to be over $5 billion, with revenue sources including 
market data and technology; equities trading and listings; 
derivatives trading and listings; and settlement and custody. NewCo 
will own many of the world's leading brands in finance. Its post-
merger leadership will be split between former executives from both 
NYSE and DB. The current DB Chief Executive Officer will stay on as 
Chairman, and the current NYSE CEO will remain CEO of the combined 
entity.

RELEVANT MARKETS

Displayed Equities Trading Services

    12. Displayed equities trading services comprise a relevant 
antitrust product market and a ``line of commerce'' within the 
meaning of Section 7 of the Clayton Act. These services include 
providing mechanisms and ancillary services to facilitate the public 
purchase and sale of exchange-traded stocks (those defined as ``NMS 
stock'' under Rule 600(b)(47) of Regulation NMS, 17 C.F.R. Sec.  200 
et seq.). These services are offered mainly by national stock 
exchanges registered under Section 6 of the Securities Exchange Act 
of 1934, 15 U.S.C. Sec.  78f, and also by electronic communications 
networks (``ECNs'') regulated by Regulation ATS, 17 C.F.R. Sec.  
242.300 et seq.
    13. Several key attributes separate displayed from undisplayed 
or ``dark'' equities trading services, including the continuous pre-
trade publication of the best-priced quotations for buying and 
selling exchange-traded stocks in a national consolidated data 
stream, the display of certain customer limit orders (offers to buy 
and sell stock at particular prices), and the provision of deep and 
reliable liquidity for a broad array of exchange-traded stocks. 
Displayed trading venues, in particular those operated by NYSE, The 
NASDAQ OMX Group, Inc., Direct Edge, and BATS Global Markets, Inc. 
form the backbone of the American national market system and over 
the past several years have accounted for roughly 65% to 75% of the 
overall average daily trading volume in the United States. Broker-
dealers, institutional investors, and other customers rely on 
displayed trading venues to provide meaningful price discovery for 
exchange-traded stocks and to act as exchanges of last resort, 
especially for thinly traded stocks, in times of market volatility 
or stress.
    14. Undisplayed trading services account for roughly 25% to 35% 
of total average daily trading volume and serve a very different 
purpose for investors: to allow for anonymous matching of orders 
without publicly revealing the intention to trade before execution. 
Institutional investors and other traders use these services to 
minimize the likelihood that their trades will cause the stock price 
to move against their interest. Most of the undisplayed trading 
centers offer less liquidity on most stocks (indeed, an alternative 
trading system providing undisplayed trading must account for less 
than 5% trading volume in a stock or the venue automatically becomes 
displayed by regulations promulgated by the U.S. Securities and 
Exchange Commission (``SEC'')) and base their prices on those 
prevailing in the displayed equities trading centers.
    15. The relevant geographic market is the United States. Trading 
equities on a foreign exchange is not an adequate substitute for 
trading on an exchange in the United States. Trading on an exchange 
outside the United States exposes traders to risks like foreign 
exchange risk, country risk, reputational risk,

[[Page 81970]]

different or potentially lax regulatory environments for trading, 
lack of analyst coverage, different accounting standards, time 
differences, and language differences, among other things. 
Additionally, the majority of American companies choose to list on 
domestic exchanges. Therefore, to trade most publicly-listed 
American stocks, investors must use stock exchanges located in the 
United States.
    16. The market for displayed equities trading services in the 
United States satisfies the hypothetical monopolist test. A profit-
maximizing monopolist in the offering of displayed equities trading 
services in the United States likely would impose at least a small 
but significant and non-transitory increase in the price of such 
services. Not enough customers would switch to alternative means of 
trading equities in undisplayed trading centers or foreign exchanges 
to render this price increase unprofitable.

Listing Services for Exchange-Traded Products

    17. The provision of ETP listing services constitutes a relevant 
antitrust product market and a ``line of commerce'' within the 
meaning of Section 7 of the Clayton Act. An ETP is typically an 
exchange-listed equity security instrument other than a standard 
corporate cash equity, the performance of which is designed to track 
another specific instrument, asset or group of assets, such as a 
market index or a selected basket of corporate stocks. ETPs are 
typically sponsored by firms that monitor and manage the composition 
and performance of the ETP. The most popular type of ETP today is an 
exchange-traded fund, an equity fund with a form of exchange-listed 
securities (often trust units) that can be traded like a stock but 
that is also benchmarked against another stock, index or other 
asset. Buying an ETP offers a simple way for investors to diversify 
their portfolios without having to buy each individual corporate 
stock or other financial instrument directly. For instance, the SPDR 
S&P 500 exchange-traded fund tracks the S&P 500 U.S. stock index, 
which comprises widely held American stocks. ETFs and other ETPs are 
very popular and serve as the cornerstone of many individual 
investors' portfolios.
    18. The relevant geographic market is the United States. Listing 
an ETP on a foreign exchange is not an adequate substitute for 
listing on an exchange in the United States. U.S. sponsors of ETPs 
overwhelmingly choose to list domestically, because it allows them 
to build brand awareness and reputation and stay close to U.S. 
capital markets and investors in the United States considering the 
purchase and sale of ETFs and other ETPs, as well as the analysts 
that cover ETPs and ETFs and, in many cases, the underlying or 
related assets, indexes, or products.
    19. The market for ETP listing services in the United States 
satisfies the hypothetical monopolist test. A profit-maximizing 
monopolist that was the only present and future firm in the offering 
of ETP listing services in the United States likely would impose at 
least a small but significant and non-transitory increase in the 
price of ETP listings. Not enough customers would switch to 
alternatives to render this price increase unprofitable.

Real-time Proprietary Equity Data

    20. Real-time proprietary equity data is a relevant antitrust 
product market and a ``line of commerce'' within the meaning of 
Section 7 of the Clayton Act. Access to affordable, reliable and 
timely data about the stock market is essential for informed stock 
trading. NYSE and Direct Edge are among only four major competitors 
that aggregate and disseminate certain market data to brokers, 
dealers, investors, and news organizations. They sell (or with 
little lead time could easily sell) competing proprietary market 
data products derived from trading activities occurring both on and 
off their exchanges.
    21. The product market for real-time proprietary equity data 
consists of what is commonly referred to in the industry as ``non-
core'' data. Market participants generally refer to two broad 
categories of critical market data: ``core'' and ``non-core.'' Core 
data refers to the transaction data the SEC requires stock exchanges 
to report to securities information processors for consolidation and 
public distribution, including the current best bid and offer for 
each stock on every exchange and information on each stock trade, 
including the last sale. Non-core data includes trading volume and 
``depth of book'' data that certain exchanges collect and sell, 
i.e., the underlying quotation data on any given exchange. Non-core 
data helps traders determine where liquidity for a given stock 
exists during the day and the depth of that liquidity. Each exchange 
(or other trading platform) owns non-core data and can distribute it 
voluntarily for a profit in competition with data from other 
exchanges. Non-core data products can be made to replicate core data 
and exchanges can package and sell both core and non-core data 
together.
    22. The market for real-time proprietary equity data satisfies 
the hypothetical monopolist test. A profit-maximizing monopolist in 
the offering of real-time proprietary equity data likely would 
impose at least a small but significant and non-transitory increase 
in the price of its equity data products. Not enough customers would 
switch to other products or services to render this price increase 
unprofitable.
    23. The relevant geographic market is the United States. Real-
time proprietary equity data in this context relate only to domestic 
trading of U.S.-listed stock. Customers needing real-time 
proprietary equity data relating to U.S.-listed stocks cannot turn 
to foreign alternatives.

ANTICOMPETITIVE EFFECTS

NYSE and Direct Edge Are Head-to-Head Competitors

    24. NYSE and Direct Edge compete head-to-head in displayed 
equities trading services and in the provision of real-time 
proprietary equity data products. Direct Edge over the years has 
been a force in modernizing stock trading with cutting edge 
technology, faster trading times, lower prices, and new market 
models. Direct Edge began in 1998 as an electronic communication 
network named Attain. By 2007, it was a major trading venue owned 
and supported by broker-dealers Knight Capital, Citadel and Goldman 
Sachs. These broker-dealers used Direct Edge as a counterweight to 
the exchange duopoly of NYSE and NASDAQ. In December 2008, Direct 
Edge and ISE agreed that ISE would buy part of Direct Edge and 
Direct Edge would take control of the struggling ISE Stock Exchange. 
In March 2010, Direct Edge received approval from the SEC to convert 
its two ECNs into national securities exchanges under Section 6 of 
the Securities Exchange Act of 1934 (``Exchange Act'').
    25. Direct Edge was first to offer two trading platforms using 
the same technology, but with different pricing schemes. EDGA 
historically has been operated as a lower cost exchange, being 
typically free or nearly free for many traders to make offers to buy 
or sell stock at certain posted prices (i.e., ``post liquidity'') as 
well as for customers to trade against these offers and buy and sell 
stock (i.e., ``take liquidity''), making EDGA attractive to traders 
sensitive to execution charges. Approximately one-third of Direct 
Edge volume trades over EDGA. EDGX historically has offered a more 
traditional pricing structure whereby the exchange normally pays 
customers to post liquidity and charges a fee for them to take 
liquidity. Although the two platforms have different pricing 
structures and cater to different segments, they share technology, 
support, code, and data centers.
    26. NYSE has responded to Direct Edge's aggressive tactics in 
part by improving its own technology and changing its pricing. For 
example, NYSE in 2009 replaced its trading system in an effort to 
regain business lost mainly to the sophisticated electronic 
platforms at Direct Edge and BATS. The new system was faster, 
reducing transaction processing time to less than 10 milliseconds, 
which at the time made NYSE roughly as fast as its rivals. NYSE 
largely was able to stabilize its share of trading volume by 
implementing a new market model and introducing a new pricing 
scheme, which gave rebate incentives to certain designated market 
makers (i.e., those market participants that agreed to buy and sell 
particular stocks at certain prices for certain amounts of time).
    27. Direct Edge's investors, mainly broker-dealers, use its 
exchanges to put downward pressure on trading fees at NYSE and other 
exchanges. When possible, Direct Edge's broker-dealer investors 
often send trades to a Direct Edge exchange in order to keep their 
overall transaction costs down. In this way, Direct Edge helped spur 
a 2009 pricing war that substantially reduced the cost of trading 
stocks in the United States.
    28. NYSE and Direct Edge also are head-to-head competitors in 
the provision of real-time proprietary equity data. Both are well-
situated to offer new real-time equity data products and equity data 
products that replicate portions of core data offerings, but with 
even faster feeds.

[[Page 81971]]

Direct Edge Is a Potential Competitor to NYSE in Listing Services 
for Exchange-Traded Products

    29. Direct Edge is a potential competitor to NYSE in listing 
services for ETPs. An ETP, including an ETF, must be listed on a 
registered stock exchange in order to be widely-traded in the United 
States. Exchanges typically compete for listings based on market 
structure, market maker incentives, marketing, and other associated 
services.
    30. NYSE dominates the business of providing listing services 
for ETPs. NYSE's major competitors are NASDAQ, with a small share, 
and recent entrant BATS. Direct Edge, as a leading operator of 
registered stock exchanges, is uniquely situated for entry and 
already imposes competitive discipline on NYSE: its potential entry 
has already affected NYSE decisions to innovate and its pricing 
decisions in its ETP listings business.

This Merger Would Substantially Lessen Competition

    31. NYSE and Direct Edge are currently vigorous competitors and 
closely monitor each other's competitive positions in at least two 
highly-concentrated markets. They are also close potential 
competitors in a third highly-concentrated market, listing services 
for ETPs, in which NYSE is a dominant player. Upon consummation of 
the proposed transaction, NewCo would own NYSE and would be able to 
control NYSE's management decisions.
    32. Upon consummation of the proposed transaction, NewCo also 
would become, through ISE, the largest equity owner and most 
influential member of Direct Edge. NewCo would be able to appoint 
three of the eleven Direct Edge managers, and one representative to 
each of the EDGA and EDGX exchange's respective corporate boards. 
NewCo would have important ancillary rights at Direct Edge: veto 
rights over certain major corporate actions, representation on key 
committees, and shareholder rights under corporate law, such as the 
right to file shareholder derivative lawsuits. NewCo also would have 
access to Direct Edge's non-public, competitively sensitive 
information, and to the company's officers and employees. NewCo's 
ownership interests and associated rights would give it influence 
over Direct Edge's management decisions.
    33. NewCo's presence on the Direct Edge boards would also likely 
chill board-level discussions of competition with NYSE. Direct Edge 
was formed, in part, as a customer-owned foil to NYSE and NASDAQ. 
When NYSE or NASDAQ fails to innovate or price competitively, 
broker-dealers can encourage Direct Edge to innovate or can shift 
their business to Direct Edge. If a NYSE-affiliate were sitting on 
Direct Edge boards, the broker-dealer board members would likely not 
want to discuss or reveal Direct Edge's potential innovations or 
other competitive initiatives targeting NYSE.
    34. NewCo would have the incentive and ability to use its 
ownership, influence, and access to information as to both NYSE and 
Direct Edge to reduce competition between the companies in markets 
where they are significant competitors or potential competitors, 
resulting in an increase in prices or a reduction in innovation and 
quality for a significant number of trading, listings, and data 
customers.

ENTRY

    35. Supply responses from competitors or entry of new potential 
competitors in the relevant markets--displayed equities trading 
services, ETP listing services, and real-time proprietary equity 
data--would not prevent the likely anticompetitive effects of the 
proposed merger. The merged firm would possess significant 
advantages that any new or existing competitor would have to 
overcome to successfully compete with the merged firm.
    36. Barriers to entry into each of these markets are formidable. 
In the market for displayed equities trading services, any entrant 
would have to overcome hurdles of reputation, scale and network 
effects to successfully challenge the incumbents. In ETP listing 
services, any entrant would have to overcome numerous barriers to 
successfully challenge NYSE, including regulation, reputation, 
scale, and liquidity. Direct Edge is in a strong position to enter 
because it is already a registered stock exchange with reputation, 
scale and liquidity. Finally, competition in real-time proprietary 
equity data is largely limited to registered securities exchanges, 
and is closely linked to and derived from an exchange's presence in 
trading and market data collection. Only four exchange operators 
today have large enough public trading volume and existing 
facilities for collecting, aggregating, and disseminating data to 
meaningfully compete. They enjoy a significant advantage over any 
possible entrant.

VIOLATIONS ALLEGED

    37. The United States incorporates the allegations of paragraphs 
1 through 36.
    38. The proposed transaction between DB and NYSE would 
substantially lessen competition in interstate trade and commerce in 
violation of Section 7 of the Clayton Act, 15 U.S.C. Sec.  18.
    39. Unless restrained, the transaction will have the following 
anticompetitive effects, among others:
    a. Actual and potential competition between NYSE and Direct Edge 
in displayed equities trading services and real-time proprietary 
equity data products in the United States will be substantially 
lessened;
    b. Potential competition between NYSE and Direct Edge in ETP 
listing services in the United States will be substantially 
lessened;
    c. Prices for displayed equities trading services, ETP listing 
services, and real-time proprietary equity data products likely will 
increase; and
    d. Innovation in displayed equities trading services, ETP 
listing services, and real-time proprietary equity data products 
likely will decrease.

RELIEF REQUESTED

    40. The United States requests that:
    a. the proposed merger of NYSE and DB be adjudged to violate 
Section 7 of the Clayton Act, 15 U.S.C. Sec.  18;
    b. DB and NYSE be enjoined from carrying out the proposed merger 
or carrying out any other agreement, understanding, or plan by which 
DB and NYSE would acquire, be acquired by, or merge with each other;
    c. The United States be awarded the costs of this action; and
    d. The United States receives such other and further relief as 
the case requires and the Court deems just and proper.

Dated: December 22, 2011
Respectfully submitted,
FOR PLAINTIFF UNITED STATES:

/s/Sharis Pozen
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SHARIS POZEN (DC Bar 446732)
Acting Assistant Attorney General

/s/Leslie C. Overton
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LESLIE C. OVERTON (DC Bar 454493)
Deputy Assistant Attorney General

/s/Patricia A. Brink
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PATRICIA A. BRINK
Director of Civil Enforcement

/s/James J. Tierney
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JAMES J. TIERNEY (DC Bar 434610)
Chief
Networks and Technology Enforcement Section

/s/Scott A. Scheele
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SCOTT A. SCHEELE (DC Bar 429061)
Assistant Chief
Networks and Technology Enforcement Section

/s/Alexander P. Okuliar
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ALEXANDER P. OKULIAR (DC Bar 481103)
Attorney
Networks and Technology Enforcement Section
Antitrust Division
U.S. Department of Justice
450 Fifth Street NW., Suite 7100
Washington, DC 20530
Telephone: (202) 532-4564
Fax: (202) 616-8544
Email: alexander.okuliar@usdoj.gov

GEORGE S. BARANKO (DC Bar 288407)
MICHAEL D. BONANNO (DC Bar 998208)
TRAVIS R. CHAPMAN
HELEN CHRISTODOULOU
NINA B. HALE
RICHARD D. MOSIER
CHARLES V. REILLY
NATALIE A. ROSENFELT

Attorneys for the United States

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA,

Plaintiff,
v.

DEUTSCHE B[Ouml]RSE AG,
and

[[Page 81972]]

NYSE EURONEXT,

Defendants.

Case: 1:11-cv-02280
Assigned To: Beryl A. Howard
Date: 12/22/2011
Description: Antitrust

COMPETITIVE IMPACT STATEMENT

    Plaintiff United States of America (``United States''), pursuant 
to Section 2(b) of the Antitrust Procedures and Penalties Act 
(``APPA'' or ``Tunney Act''), 15 U.S.C. Sec.  16(b)-(h), files this 
Competitive Impact Statement relating to the proposed Final Judgment 
submitted for entry in this civil antitrust proceeding.

I. NATURE AND PURPOSE OF THIS PROCEEDING

    On February 15, 2011, NYSE Euronext (``NYSE'') and Deutsche 
B[ouml]rse AG (``DB''), two of the world's leading owners and 
operators of financial exchanges, agreed to merge in a transaction 
valued at approximately $9 billion. NYSE and DB are seeking to 
combine their businesses and create the largest exchange group in 
the world under a new Dutch holding company (``NewCo''). NewCo would 
have dual headquarters in Frankfurt and New York.
    Both NYSE and DB have substantial operations in the United 
States, including between them interests in five major American 
stock exchanges. NYSE is one of the two largest and most prestigious 
stock exchange operators in the United States. It owns the New York 
Stock Exchange LLC, NYSE Arca, Inc., and NYSE Amex LLC. DB, through 
a series of subsidiaries, is the largest unitholder of Direct Edge 
Holdings LLC (``Direct Edge''), which operates the EDGA and EDGX 
electronic exchanges and is the fourth largest stock exchange 
operator in the United States by volume of shares traded. Direct 
Edge is considered an innovator in the exchange space and a 
competitive constraint on NYSE. This transaction therefore poses a 
significant risk that NewCo could use its influence to dampen the 
competitive zeal of Direct Edge. The United States brought this 
lawsuit on December 22, 2011, seeking to enjoin the proposed 
transaction. After a thorough investigation, the United States 
believes that the likely effect of the merger would be to lessen 
substantially competition and potential competition in displayed 
equities trading services, listing services for exchange-traded 
products, including exchange-traded funds, and real-time proprietary 
equity data products in the United States in violation of Section 7 
of the Clayton Act, 15 U.S.C. Sec.  18.
    Simultaneous with the filing of the complaint, the United States 
filed a proposed Final Judgment designed to remedy the Section 7 
violation. Under the proposed Final Judgment, which is explained 
more fully below, Defendants are subject to affirmative obligations 
to divest DB of its holdings in Direct Edge and to immediately 
eliminate DB's ability, through its subsidiaries, to influence the 
business and governance of Direct Edge.
    The United States and Defendants have stipulated that the 
proposed Final Judgment may be entered after compliance with the 
APPA, unless the United States withdraws its consent. Entry of the 
proposed Final Judgment would terminate this action, except that 
this Court would retain jurisdiction to construe, modify, or enforce 
the proposed Final Judgment and to punish violations thereof.

II. Description of the Events Giving Rise to the Alleged Violation

A. The Defendants and the Proposed Transaction

    DB is a German Aktiengesellschaft that runs financial exchanges 
and ancillary businesses in the United States and Europe. DB 
generates revenue from several sources, including fees for 
securities listings and trading, fees for market data, and charges 
for licensing of exchange-related technology. DB, through its 
subsidiaries, is the largest holder of equity in Direct Edge, a 
leading stock exchange operator in the United States. DB owns 50% of 
the equity and controls Frankfurt-based Eurex Group, a leading 
European derivatives exchange operator. DB has announced an 
agreement to buy the remaining equity in Eurex after DB completes 
its merger with NYSE. Eurex owns International Securities Exchange 
Holdings, Inc. (``ISE''), a leading options exchange in New York 
that also owns a 31.54% equity interest in Direct Edge. In 2010, 
DB's ISE and Eurex subsidiaries earned substantial revenues from 
sales in the United States.
    NYSE is a publicly traded Delaware corporation with its 
principal place of business in New York, New York. NYSE operates 
financial exchanges in the United States and across Europe. In the 
United States, NYSE operates the New York Stock Exchange, which is 
the storied hybrid exchange with both trading floor and electronic 
components; NYSE Arca, which is an all-electronic exchange; and NYSE 
Amex, the former American Stock Exchange, which targets mainly 
small- and medium-sized companies. NYSE also generates revenue from 
a wide range of exchange-related businesses, including securities 
listings, trading, data licensing, and technology licensing. In 
2010, NYSE earned more than $3 billion in total revenues from within 
the United States.
    Direct Edge is a Delaware limited liability company with its 
principal place of business in Jersey City, New Jersey. Direct Edge, 
through its subsidiary Direct Edge Holdings, Inc., owns and operates 
two leading U.S. stock exchanges, EDGA Exchange, Inc. and EDGX 
Exchange, Inc. Direct Edge is majority-owned by ISE, Goldman Sachs 
Group Inc., Citadel Investment Group LLC, and Knight Capital Group 
Inc. ISE owns 31.54% of Direct Edge and holds certain key voting and 
special veto rights, such as the right to veto entry by Direct Edge 
into options trading. ISE also has the right to appoint three 
members to the Direct Edge board of managers and one member to each 
of the corporate boards of EDGA Exchange, Inc. and EDGX Exchange, 
Inc. Goldman Sachs, Citadel, and Knight each own 19.9% of Direct 
Edge. The remaining 8.76% is owned by a group of five brokers, 
including affiliates of JP Morgan Chase & Co. (through LabMorgan 
Corp.), Bank of America (through Merrill Lynch L.P. Holdings, Inc.), 
Nomura Securities International, Inc., Deutsche Bank USA (through DB 
US Financial Markets Holding Corporation), and Sun Partners LLC. 
Direct Edge's exchanges compete head to head with the NYSE 
exchanges. In 2010, Direct Edge earned substantial revenues from 
within the United States.

B. Relevant Markets

    Antitrust law, including Section 7 of the Clayton Act, protects 
consumers from anticompetitive conduct, such as a firm's acquisition 
of the ability to raise prices or reduce innovation. Market 
definition assists antitrust analysis by focusing attention on those 
markets where competitive effects are likely to be felt. Well-
defined markets include both sellers and buyers, whose conduct most 
strongly influences the nature and magnitude of competitive effects. 
Defining relevant markets in merger cases frequently begins by 
identifying a collection of products or set of services over which a 
hypothetical profit maximizing monopolist likely would impose at 
least small but significant and non-transitory increase in price. 
Defining markets in this way ensures that antitrust analysis takes 
account of a broad enough set of products to evaluate whether a 
transaction is likely to lead to a substantial lessening of 
competition.
    Here, the investigation revealed three relevant markets. The 
first is displayed equities trading services, which includes stock 
trading services offered by trading venues that publicly disclose 
certain key information about quotes and transactions. Registered 
stock exchanges and electronic communication networks offer such 
displayed trading services. Displayed trading services are 
accompanied by the continuous pre-trade publication of the best-
priced quotations for buying and selling exchange-traded stocks in a 
national consolidated data stream, the display of certain customer 
limit orders (offers to buy and sell stock at particular prices), 
and the provision of deep and reliable liquidity for a broad array 
of exchange-traded stocks. Displayed equities trading services form 
the backbone of the American national market system and facilitate 
equity price discovery in the United States. Displayed services are 
by their nature very different from undisplayed equity trading 
services, like dark pools, which offer no pre-trade transparency and 
cater mainly to institutional traders looking to buy or sell large 
volumes of stock while minimizing stock price movement.
    A second relevant market consists of the listing services for 
exchange-traded products (``ETPs''). An ETP is typically an 
exchanged-listed equity security instrument other than a standard 
corporate cash equity, the performance of which is designed to track 
another specific instrument, asset or group of assets, such as a 
market index or a specific basket of corporate stocks. ETPs 
typically are sponsored by firms that determine the composition of 
the ETP and then manage it for investors. The most popular type of 
ETP today is an exchange-traded fund (``ETF''), which is a security 
traded like a stock that is designed to replicate the returns of a 
stock, index or similar asset. Exchanges compete to

[[Page 81973]]

list, or offer for trading, ETPs in exchange for listing fees and 
fees for ancillary services. Exchanges compete for listings mainly 
on the basis of their market structure, market maker incentives, 
marketing, and other associated services. ETP listings are a 
separate relevant market because there are no reasonable substitutes 
for listing an ETP if a sponsoring firm wants a widely-traded 
product with access to the liquidity offered by exchanges. In 
addition to which, only registered exchanges can offer these listing 
services.
    A third relevant market encompasses real-time proprietary equity 
data products comprised of non-core data. There are two general 
types of equity data: ``core'' and ``non-core.'' Core data refers to 
the transaction data the U.S. Securities and Exchange Commission 
requires stock exchanges to aggregate and distribute publicly, 
including the current best bid and offer for each stock on every 
exchange and information on each stock trade, including the last 
sale. Non-core data includes trading volume and ``depth of book'' 
data that certain exchanges collect and sell, i.e., the underlying 
quotation data on any given exchange. Non-core data helps traders 
determine where liquidity for a given stock exists during the day 
and the depth of that liquidity. Access to market data is critical 
to many market participants and followers, who are willing to pay a 
premium for the best price, quote, volume, and other data available 
about exchange-listed equities being traded on the exchanges. Each 
exchange (or other trading venue) owns its non-core data and can 
distribute it for a profit. Proprietary data products can be made to 
replicate core data and exchanges can package and provide both core 
and non-core data together. NYSE and Direct Edge, as registered 
exchange operators, are among only four major competitors supplying 
real-time proprietary equity data products derived from trading 
activities.
    Antitrust analysis must also consider the geographic dimensions 
of competition. Here, the relevant geographic markets exist within 
the United States and are not affected by competition outside the 
United States. The competitive dynamics for each of the three 
markets is distinctly different outside the United States.

C. Competitive Effects

    NewCo would have the incentive and ability to significantly 
influence the competitive conduct of Direct Edge through ISE's 
voting interest, governance rights, or other shareholder rights 
under corporate law, like the right to file shareholder derivative 
suits. NewCo would likely use its influence to induce Direct Edge to 
compete less aggressively, to coordinate Direct Edge's conduct with 
the NYSE exchanges, or to disrupt day-to-day business activities at 
Direct Edge.
    NewCo's presence on the Direct Edge boards would chill 
discussion of head-to-head competition with the NYSE stock 
exchanges. Direct Edge was formed, in part, by a group of broker-
dealers intending to constrain the two large stock exchange 
operators in the United States, NYSE and NASDAQ. The broker-dealer 
owners of Direct Edge, and others, can and do turn their trades to 
Direct Edge when NYSE or NASDAQ fails to compete aggressively.
    Finally, NewCo also would gain access to non-public, 
competitively sensitive information about Direct Edge. This access 
would likely enhance NewCo's ability to coordinate the behavior of 
the NYSE and Direct Edge exchanges, or make the accommodating 
responses of NYSE faster and more targeted. And if Direct Edge 
gained access to competitively sensitive NYSE information, it would 
further elevate the risk of coordinated effects.
    Finally, even if it were unable to influence Direct Edge, NewCo 
would likely have, as a result of the partial ownership interest in 
Direct Edge, a reduced incentive to direct the NYSE exchanges to 
compete as aggressively against the Direct Edge exchanges. Since 
NewCo would share Direct Edge's losses inflicted by the NYSE 
exchanges, this may lead NewCo to behave in ways that would reduce 
those losses.
    Supply responses from competitors or entry of potential 
competitors in any of the relevant markets would not prevent the 
likely anticompetitive effects of the proposed merger. The merged 
firm would possess significant advantages that any new or existing 
competitor would have to overcome to successfully compete with the 
merged firm. Entrants face significant entry barriers including 
hurdles of reputation, scale and network effects to successfully 
challenge the incumbents in the markets for displayed equities 
trading services, listing services for ETPs, and real-time 
proprietary equity data products.

III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT

    The proposed Final Judgment is designed to preserve competition 
in displayed equities trading services, listing services for 
exchange-traded products, and real-time proprietary equity data 
products by restricting NewCo's ability to influence Direct Edge and 
by eliminating NewCo's equity stake in Direct Edge. The proposed 
Final Judgment has two principal requirements: (1) the complete 
divestiture of Defendants' equity stake in Direct Edge, and (2) the 
immediate suspension of Defendants' ability to participate in the 
governance or business of Direct Edge. The proposed Final Judgment 
also has several sections designed to ensure its effectiveness and 
adequate compliance. Each of these sections is discussed below.
    Before closing the DB-NYSE transaction, the proposed Final 
Judgment requires the Defendants provide a written plan explaining 
the steps they will take to render DB's interest in Direct Edge 
passive until such time as the divestiture occurs. Defendants must 
also certify that the plan complies with all applicable laws and 
that all voting, director, or other rights DB held have been 
eliminated, except as otherwise been provided for in the order. 
Within two calendar days of closing the transaction, any DB officer, 
director, manager, employee, affiliate, or agent must resign from 
the boards of all Direct Edge entities.
    Further, from the date of the filing of the Final Judgment, the 
Defendants are prohibited from suggesting or nominating any 
candidate for election to the board of any Direct Edge entities or 
having any officer, director, manager, employee, or agent serve as 
an officer, director, manager, employee with or for any Direct Edge 
entities. The Defendants are also prohibited from any participation 
in a nonpublic meeting of any Direct Edge entities or in otherwise 
receiving any nonpublic information from any Direct Edge employee or 
board member, except to the extent necessary to fulfill the 
provisions of the proposed Final Judgment or to fulfill financial 
reporting obligations. The Defendants are further prohibited from 
voting except to the extent necessary to fulfill the provisions of 
the proposed Final Judgment, in which case they must vote their 
shares in proportion to how the other owners vote.
    The Defendants are also prohibited from using their ownership 
interest in Direct Edge to exert any influence over it or to prevent 
it from making any necessary changes to its corporate governance 
documents to comply with the Final Judgment. The proposed Final 
Judgment provides that the Defendants must continue to provide 
regulatory and backup facility services to Direct Edge pursuant to 
existing contracts, and requires that the Defendants implement a 
firewall to prevent any inappropriate use of information gained by 
the Defendants about Direct Edge's business as a result of those 
contracts. The firewall requires that only the employees of the 
Defendants specifically necessary to provide the agreed upon 
services may receive any information from Direct Edge under those 
agreements, and those employees are prohibited from using any such 
information for any purpose other than providing the agreed upon 
services. This provision will allow Direct Edge to continue to 
receive its contracted services while reducing the opportunities for 
the Defendants to misuse any information provided by Direct Edge 
under the agreement. The anticipated effect of all these provisions 
is to maintain Direct Edge as an independent and viable competitor.
    The proposed Final Judgment provides a two-year period, which 
the United States in its sole discretion may extend up to three 
additional years, for Defendants to divest all equity ownership in 
Direct Edge. The assets may be divested by open market sale, public 
offering, private sale, private placement, or repurchase by Direct 
Edge. If the assets are divested by private sale or private 
placement the United States must, in its sole discretion, approve 
the buyers of the assets. This provision ensures that the 
divestiture itself does not create any competitive issues. To 
maintain the complete independence of Direct Edge after the 
divestiture, the proposed Final Judgment prohibits the Defendants 
from financing any part of any purchase made pursuant to the Final 
Judgment.
    In the event that Defendants are unable to take the steps 
required by the proposed Final Judgment to render their Direct Edge 
interest passive or create a plan demonstrating their compliance 
with the proposed Final Judgment, or do not accomplish the 
divestiture as prescribed in the proposed Final Judgment, Section 
VII of the Final

[[Page 81974]]

Judgment provides that the Court will appoint a trustee selected by 
the United States to effect the divestiture upon the request of the 
United States. If a trustee is appointed, the proposed Final 
Judgment provides that Defendants will pay all costs and expenses of 
the trustee. After his or her appointment becomes effective, the 
trustee will file monthly reports with the Court and the United 
States setting forth his or her efforts to accomplish the 
divestiture. At the end of six months, if the divestiture has not 
been accomplished, the trustee and the United States will make 
recommendations to the Court, which shall enter such orders as 
appropriate in order to carry out the purpose of the trust, 
including extending the trust or the term of the trustee's 
appointment.
    The proposed Final Judgment lasts for ten years, and prohibits 
the Defendants from acquiring any additional equity interest in 
Direct Edge during that time. It also provides procedures for the 
United States to access the Defendants' records and personnel in 
order to secure compliance with the terms of the Final Judgment.
    The proposed Final Judgment will eliminate the anticompetitive 
effects of the acquisition by maintaining Direct Edge as an 
independent and vibrant competitive constraint in displayed equities 
trading services, listing services for exchange-traded products, and 
real-time proprietary equity data products in the United States.

IV. REMEDIES APPLICABLE TO POTENTIAL PRIVATE LITIGANTS

    Section 4 of the Clayton Act, 15 U.S.C. Sec.  15, provides that 
any person who has been injured as a result of conduct prohibited by 
the antitrust laws may bring suit in federal court to recover three 
times the damages the person has suffered, as well as costs and 
reasonable attorneys' fees. Entry of the proposed Final Judgment 
will neither impair nor assist the bringing of any private antitrust 
damage action. Under the provisions of Section 5(a) of the Clayton 
Act, 15 U.S.C. Sec.  16(a), the proposed Final Judgment has no prima 
facie effect in any subsequent private lawsuit that may be brought 
against Defendants.

V. PROCEDURES APPLICABLE FOR APPROVAL OR MODIFICATION OF THE PROPOSED 
FINAL JUDGMENT

    The United States and Defendants have stipulated the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least 60 days preceding the 
effective date of the proposed Final Judgment within which any 
person may submit to the United States written comments regarding 
the proposed Final Judgment. Any person who wishes to comment should 
do so within 60 days of the date of publication of this Competitive 
Impact Statement in the Federal Register, or the last date of 
publication in a newspaper of the summary of this Competitive Impact 
Statement, whichever is later. All comments received during this 
period will be considered by the United States, which remains free 
to withdraw its consent to the proposed Final Judgment at any time 
prior to the Court's entry of judgment. The comments and the 
response of the United States will be filed with the Court and 
published in the Federal Register.
    Written comments should be submitted to:

James J. Tierney, Chief, Networks & Technology Enforcement Section, 
Antitrust Division, United States Department of Justice, 450 Fifth 
Street, NW., Suite 7100, Washington, DC 20530.
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the 
Court for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. ALTERNATIVES TO THE PROPOSED FINAL JUDGMENT

    The United States considered, as an alternative to the proposed 
Final Judgment, seeking preliminary and permanent injunctions 
against Defendants' transaction and proceeding to a full trial on 
the merits. The United States is satisfied, however, that the relief 
in the proposed Final Judgment will preserve competition in the 
markets for displayed equities trading services, listing services 
for exchange-traded products, and real-time proprietary equity data 
products. Thus, the proposed Final Judgment would protect 
competition as effectively as would any remedy available through 
litigation, but avoids the time, expense, and uncertainty of a full 
trial on the merits.

VII. STANDARD OF REVIEW UNDER THE APPA FOR PROPOSED FINAL JUDGMENT

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a 60-day comment period, after which the Court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. Sec.  16(e)(1). In making that 
determination, the Court, in accordance with the statute as amended 
in 2004, is required to consider:
    (A) the competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration of relief sought, anticipated effects of 
alternative remedies actually considered, whether its terms are 
ambiguous, and any other competitive considerations bearing upon the 
adequacy of such judgment that the court deems necessary to a 
determination of whether the consent judgment is in the public 
interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and 
individuals alleging specific injury from the violations set forth 
in the complaint including consideration of the public benefit, if 
any, to be derived from a determination of the issues at trial.
    15 U.S.C. Sec.  16(e)(1)(A) & (B). In considering these 
statutory factors, the Court's inquiry is necessarily a limited one 
as the United States is entitled to ``broad discretion to settle 
with the Defendant within the reaches of the public interest.'' 
United States v. Microsoft Corp., 56 F.3d 1448, 1461 (DC Cir. 1995); 
see generally United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1 
(D.D.C. 2007) (assessing public interest standard under the Tunney 
Act); United States v. InBev N.V./S.A., 2009-2 Trade Cas. (CCH) ] 
76,736, 2009 U.S. Dist. LEXIS 84787, No. 08-1965 (JR), at *3 (D.D.C. 
Aug. 11, 2009) (noting that the court's review of a consent judgment 
is limited and only inquires ``into whether the government's 
determination that the proposed remedies will cure the antitrust 
violations alleged in the complaint was reasonable, and whether the 
mechanism to enforce the final judgment are clear and 
manageable'').\1\
---------------------------------------------------------------------------

    \1\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for a court to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
Sec.  16(e) (2004), with 15 U.S.C. Sec.  16(e)(1) (2006); see also 
SBC Commc'ns, 489 F. Supp. 2d at 11 (concluding that the 2004 
amendments ``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------

    Under the APPA a court considers, among other things, the 
relationship between the remedy secured and the specific allegations 
set forth in the United States's complaint, whether the decree is 
sufficiently clear, whether enforcement mechanisms are sufficient, 
and whether the decree may positively harm third parties. See 
Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the 
relief secured by the decree, a court may not ``engage in an 
unrestricted evaluation of what relief would best serve the 
public.'' United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 
1988) (citing United States v. Bechtel Corp., 648 F.2d 660, 666 (9th 
Cir. 1981)); see also Microsoft, 56 F.3d at 1460-62; United States 
v. Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 
U.S. Dist. LEXIS 84787, at *3. Courts have held that:
    [t]he balancing of competing social and political interests 
affected by a proposed antitrust consent decree must be left, in the 
first instance, to the discretion of the Attorney General. The 
court's role in protecting the public interest is one of insuring 
that the government has not breached its duty to the public in 
consenting to the decree. The court is required to determine not 
whether a particular decree is the one that will best serve society, 
but whether the settlement is `within the reaches of the public 
interest.' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\ In 
determining whether

[[Page 81975]]

a proposed settlement is in the public interest, a district court 
``must accord deference to the government's predictions about the 
efficacy of its remedies, and may not require that the remedies 
perfectly match the alleged violations.'' SBC Commc'ns, 489 F. Supp. 
2d at 17; see also Microsoft, 56 F.3d at 1461 (noting the need for 
courts to be ``deferential to the government's predictions as to the 
effect of the proposed remedies''); United States v. Archer-Daniels-
Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that the 
court should grant due respect to the United States's prediction as 
to the effect of proposed remedies, its perception of the market 
structure, and its views of the nature of the case).
---------------------------------------------------------------------------

    \2\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); United States v. Gillette Co., 
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the 
court is constrained to ``look at the overall picture not 
hypercritically, nor with a microscope, but with an artist's 
reducing glass''). See generally Microsoft, 56 F.3d at 1461 
(discussing whether ``the remedies [obtained in the decree are] so 
inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest.' '').
---------------------------------------------------------------------------

    In addition, ``a proposed decree must be approved even if it 
falls short of the remedy the court would impose on its own, as long 
as it falls within the range of acceptability or is `within the 
reaches of public interest.' '' United States v. Am. Tel. & Tel. 
Co., 552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) 
(quoting United States v. Gillette Co., 406 F. Supp. 713, 716 (D. 
Mass. 1975)), aff'd sub nom. Maryland v. United States, 460 U.S. 
1001 (1983); see also United States v. Alcan Aluminum Ltd., 605 F. 
Supp. 619, 622 (W.D. Ky. 1985) (approving the consent decree even 
though the court would have imposed a greater remedy). To meet this 
standard, the United States ``need only provide a factual basis for 
concluding that the settlements are reasonably adequate remedies for 
the alleged harms.'' SBC Commc'ns, 489 F. Supp. 2d at 17.
    Moreover, the Court's role under the APPA is limited to 
reviewing the remedy in relationship to the violations that the 
United States has alleged in its complaint, and does not authorize 
the court to ``construct [its] own hypothetical case and then 
evaluate the decree against that case.'' Microsoft, 56 F.3d at 1459; 
see also InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``[T]he `public 
interest' is not to be measured by comparing the violations alleged 
in the complaint against those the court believes could have, or 
even should have, been alleged.''). Because the ``court's authority 
to review the decree depends entirely on the government's exercising 
its prosecutorial discretion by bringing a case in the first 
place,'' it follows that ``the court is only authorized to review 
the decree itself,'' and not to ``effectively redraft the 
complaint'' to inquire into other matters that the United States did 
not pursue. Microsoft, 56 F.3d. at 1459-60. Courts ``cannot look 
beyond the complaint in making the public interest determination 
unless the complaint is drafted so narrowly as to make a mockery of 
judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
    In its 2004 amendments, Congress made clear its intent to 
preserve the practical benefits of utilizing consent decrees in 
antitrust enforcement, adding the unambiguous instruction that 
``[n]othing in this section shall be construed to require the court 
to conduct an evidentiary hearing or to require the court to permit 
anyone to intervene.'' 15 U.S.C. Sec.  16(e)(2). This language 
effectuates what Congress intended when it enacted the Tunney Act in 
1974, as Senator Tunney explained: ``[t]he court is nowhere 
compelled to go to trial or to engage in extended proceedings which 
might have the effect of vitiating the benefits of prompt and less 
costly settlement through the consent decree process.'' 119 Cong. 
Rec. 24,598 (1973) (statement of Senator Tunney). Rather, the 
procedure for the public interest determination is left to the 
discretion of the Court, with the recognition that the court's 
``scope of review remains sharply proscribed by precedent and the 
nature of Tunney Act proceedings.'' SBC Commc'ns, 489 F. Supp. 2d at 
11.\3\
---------------------------------------------------------------------------

    \3\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am. Dairymen, Inc., 1977-1 Trade Cas. (CCH) ] 
61,508, at 71,980 (W.D. Mo. 1977) (``Absent a showing of corrupt 
failure of the government to discharge its duty, the Court, in 
making its public interest finding, should * * * carefully consider 
the explanations of the government in the competitive impact 
statement and its responses to comments in order to determine 
whether those explanations are reasonable under the 
circumstances.''); S. Rep. No. 93-298, 93d Cong., 1st Sess., at 6 
(1973) (``Where the public interest can be meaningfully evaluated 
simply on the basis of briefs and oral arguments, that is the 
approach that should be utilized.'').
---------------------------------------------------------------------------

VIII. DETERMINATIVE DOCUMENTS

    There are no determinative materials or documents within the 
meaning of the APPA that the United States considered in formulating 
the proposed Final Judgment.

Dated: December 22, 2011
Respectfully submitted,
FOR PLAINTIFF
UNITED STATES OF AMERICA

/s/Alexander P. Okuliar
-----------------------------------------------------------------------

Alexander P. Okuliar (DC Bar No. 481103)
Attorney
U.S. Department of Justice
Antitrust Division
450 Fifth Street NW., Suite 7100
Washington, DC 20530
Tel: (202) 532-4564
Fax: (202) 307-9952
Email: alexander.okuliar@usdoj.gov.

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA,

Plaintiff,
v.

DEUTSCHE B[Ouml]RSE AG,
and
NYSE EURONEXT,

Defendants.

Case:
Assigned To:
Date:
Description: Antitrust

[Proposed] Final Judgment

    WHEREAS, Plaintiff United States of America (``United States'') 
filed its Complaint on December 22, 2011, the United States and 
Defendants Deutsche B[ouml]rse AG and NYSE Euronext, by their 
respective attorneys, have consented to entry of this Final Judgment 
without trial or adjudication of any issue of fact or law, and 
without this Final Judgment constituting any evidence against or 
admission by any party regarding any issue of fact or law;
    AND WHEREAS, Defendants agree to be bound by the provisions of 
the Final Judgment pending its approval by the Court;
    AND WHEREAS, the United States requires that Defendants agree to 
undertake certain actions and refrain from certain conduct for the 
purpose of remedying the loss of competition alle