CELEX: 32014M7151
Language: en
Date: 2014-04-10 00:00:00
Title: Commission Decision of 10/04/2014 declaring a concentration to be compatible with the common market (Case No COMP/M.7151 - BNP PARIBAS / ROYAL BANK OF SCOTLAND) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

                                        Brussels, 10.4.2014
                                        C(2014) 2560 final
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|To the notifying party:                                                |                                                                       |
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Dear Sir/Madam,

Subject:    Case M.7151 - BNP PARIBAS/ Certain Assets of Royal Bank of Scotland Commission decision pursuant to Article 6(1)(b) of Council
         Regulation No 139/2004[1]

    1) On 6 March 2014 the Commission received a notification of a proposed concentration pursuant to Article 4 of the Merger Regulation by which
       BNP Paribas S.A. ("BNPP", France), hereafter "the notifying party" acquires within the meaning of Article 3(1)(b) of the Merger Regulation
       sole control of certain assets ("Target Business") of The Royal Bank of Scotland Plc. and The Royal Bank of Scotland N.V. (together "RBS",
       the United Kingdom) by way of purchase of assets, hereafter "the proposed transaction". BNPP and the Target Business are jointly  referred
       to as "the Parties".

       THE PARTIES

    2) BNPP is active in the field of retail banking services and  corporate  and  investment  banking  worldwide.  Its  subsidiary  BNP  Paribas
       Arbitrage Issuance BV, directly concerned by the transaction, is an entity of BNPP located in the Netherlands, specialised in the  issuing
       of securities, such as warrants, certificates, notes and other financial products, issued under a guarantee of BNPP.

    3) RBS operates retail and commercial businesses with a focus on the UK, Republic of  Ireland  and  the  United  States.  Its  core  business
       segments include personal banking and corporate banking in the UK and retail and commercial banking in the United States. RBS’  investment
       banking, wealth management and payments network have a wider international presence across Europe, the Middle East, the Americas and Asia.

    4) The Target Business consists in (i) structured investment products and equity derivatives issued by RBS, along with the economic risks and
       rewards of payments and delivery flows of these products, (ii) financial instruments held by RBS for the  purpose  of  hedging  the  risks
       associated with these products and (iii) contracts, staff composed by front office professionals necessary to ensure the continuity of the
       business, IP rights, proprietary software and proprietary indices information, all related to the assets mentioned previously.  Therefore,
       the transferred assets constitute a business with market presence within the meaning  of  paragraph  24  of  the  Commission  Consolidated
       Jurisdictional Notice under the Merger Regulation.[2]

       THE CONCENTRATION

    5) On 19 February 2014, the Parties signed a Transaction Framework Agreement based  on  which  BNPP  will  acquire  the  Target  Business  as
       described above. Therefore, the proposed transaction constitutes a concentration by way of acquisition of assets, within  the  meaning  of
       Article 3(1)(b) of the Merger Regulation.

       EU DIMENSION

    6) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million[3] (BNPP:  EUR  […]  million,  the
       Target Business: EUR […] million). Each of them has an EU-wide turnover in excess of EUR […] million (BNPP: EUR […], the Target  Business:
       EUR 446 million) but they do not achieve more than two-thirds of their aggregate EU-wide turnover within one and the same Member State.

    7) Therefore, the proposed transaction has an EU dimension, within the meaning of Article 1(2) of the Merger Regulation.

       COMPETITIVE ASSESSMENT

    8) The Parties’ activities overlap on the market for the sale and trading of equity derivatives in the EEA, namely in the  segments  of  flow
       equity derivatives, equity financing and corporate derivatives. They also overlap on the market for structuring, issuing and market making
       of structured investment products, in its sub-segments namely (i) exchange traded structured investment  products  ("ETSIP")  in  Germany,
       Italy, Finland, Norway, the Netherlands, Switzerland and Sweden and (ii) wholesale structured investment products in the EEA.

1 Equity derivatives

1  Product market definition

    9) Derivatives are financial contracts deriving their value from another asset (called "the underlying"),  which  could  for  instance  be  a
       commodity, equity or fixed income instrument or an equity index. The Commission previously analysed the market for trading and clearing of
       exchange traded derivatives performed by the exchanges, which offer trading platforms and clearing houses. The Commission considered  that
       this market could be subdivided by (i) type of contract, (ii) underling asset class such as equities, equity  indices,  option,  swaps  or
       (iii) the execution environment (Over-the-Counter ("OTC"), or on exchange).[4] However, the proposed transaction does not  relate  to  the
       trading and clearing activity as defined in these previous cases, since the Parties’ activities overlap only in OTC sales and  trading  of
       equity derivatives, thus the previous analysis of the Commission is not fully applicable to the case at hand.

   10) The notifying party submits that the market for equity derivatives could be segmented  into  (i)  flow  equity  derivatives,  (ii)  equity
       financing, and (iii) corporate derivatives, as these products are not substitutable.

   11) The market investigation largely confirmed that the market  for  equity  derivatives  could  be  subdivided  in  the  proposed  manner,[5]
       therefore, the product market for equity derivatives will be analysed accordingly for the purpose of the present case.  Nevertheless,  the
       precise scope of the product market definition can ultimately be left open, given that no competition concerns arise under  any  plausible
       market definition.

1 Flow Equity Derivatives

   12) The notifying party submits that flow equity derivatives, also referred to as "vanilla  equity  derivatives"  are  standard  products  (as
       opposed to "exotic equity derivatives", which are more complex, bespoke products) comprising options, swaps and futures on a single  stock
       (single stock derivative) or on an index of stocks (index derivative). Flow equity  derivatives  are  offered  to  financial  institutions
       (e.g., asset managers, pension funds, banks, insurance companies) and can be listed or OTC traded. However, the  distinction  between  OTC
       and exchange traded Flow Equity Derivatives is not necessary for the purpose of the present case,  since  only  OTC  traded  products  are
       concerned.

   13) The notifying party submits that the question of sub-segmentation of flow equity derivatives according to the type of the  contract  (i.e.
       between swaps, options and futures or forwards) or according to the underlying asset class may be left open.

   14) In this respect, the results of the market investigation are inconclusive. Some market participants suggest that it might  be  appropriate
       to further subdivide the market for flow equity derivatives, in particular based on  the  underlying  asset  class,  for  example  equity,
       commodity, interest rate etc., but not based on the type of contract (swaps, options and future derivatives products). One  third  of  the
       respondents consider that any subdivision would not be appropriate.[6]

   15) Ultimately, the question whether the market for flow equity should be further subdivided can be left open for the purpose of  the  present
       case, given that no competition concerns arise under any plausible market definition.

2 Equity financing

   16) Equity financing activities comprise stock lending and  borrowing  activities  ("SLAB")  operated  for  both  hedge  funds  and  financial
       institutions offered both on an exchange and OTC. The notifying party considers that prime brokerage services, which consist  in  offering
       integrated services to the client, should be included in the equity financing activities, though it is not relevant for the assessment  of
       the proposed transaction. The equity financing relevant for the case at hand is performed OTC only.

   17) The Commission has so far not analysed the market for equity financing. However the precise market definition can be  left  open  for  the
       purpose of the present case, given that no competition concerns arise under any plausible market definition.

3 Corporate Derivatives / Strategic Equity

   18) Corporate derivatives also referred to as "strategic equity", comprise  hedging  or  financing  activities  of  equity  participations  of
       corporate clients. These activities have large size and long maturities and are OTC traded.

   19) Instruments used include options (for client hedging purposes) and financing of equity participations. The portfolio of  assets  concerned
       by the transaction only includes financing instruments.

   20) Previously, the Commission has examined cases dealing with various private equity segments (in its widest sense, as equity investments  in
       unquoted companies), the supply of funds comprising equity and debt finance,[7] lending services,[8] securities lending,[9] Initial Public
       Offering advisory services and equity and debt underwriting,[10] and asset management services.

2 Geographic market definition

   21) The Commission has previously considered that the market for trading and clearing of equity  index  derivatives  could  be  considered  as
       global.[11] The Commission also noted that derivatives markets may be viewed as global in the sense that customers are located all  around
       the world, however the question whether the market is global or EEA wide has been left open.[12] As far as the geographical scope  of  the
       markets of various private equity segments is concerned (as mentioned in recital (20) above), the Commission  considered  an  EEA-wide  or
       global dimension, without concluding on the exact definition.

   22) The notifying party submits that that the market for equity derivatives and its respective sub-segments is at  least  EEA  in  scope.  The
       notifying party claims that suppliers of equity derivatives are international banks operating essentially from financial hubs such as  New
       York, London and Hong Kong. In the EEA suppliers operate either from London exclusively, or  from  London  and  a  local  historical  hub.
       Similarly, the customers, which are mainly financial institutions, operate from the same places. The notifying party notes that some banks
       may have small local sales teams, but the structuring, pricing and trading of the products is generally performed  in  London  or  in  the
       local historical hub, however as regards the equity derivatives related to the proposed transaction, equity derivatives are only issued in
       London, to clients based in the EEA.

   23) The market investigation confirmed that the market for equity derivatives and its respective sub-segments should be considered as EEA–wide
       or as global (as indicated by approximately two thirds of the respondents). Only a minority of  market  participants  suggested  that  the
       segments of flow equity derivatives and of corporate derivatives could  be  considered  as  national  in  scope  due  to,  e.g.,  customer
       purchasing patterns.[13]

   24) In view of the fact that the majority of market participants confirmed that the market should be considered as  EEA-wide  or  global,  and
       that as regards the proposed transaction all the equity derivatives are issued in London for clients in the EEA, for the  purpose  of  the
       present case, the geographic market for equity derivatives and its respective sub-segments can  be  considered  as  wider  than  national.
       Nevertheless, the precise scope of the geographic market definition, whether EEA  wide  or  global,  can  be  left  open,  given  that  no
       competition concerns arise under the alterative geographic market definitions.

2 Structured Investment products

1 Product market definition

   25) Structured products are securities that can be issued – as stock and other equities listed and traded on exchanges. They are based  on  an
       underlying such as an index, a company-issued equity, a currency or a commodity and they are issued by banks,  offer  a  return  which  is
       fixed at issuance and are often designed for local (retail) investors.

   26) The Commission has previously analysed the market for listing of structured investment products, in the context of a broader  category  of
       listing of cash instruments: equities and bonds. The Commission considered that there  are  three  equity  categories  (i)  company-issued
       equity, (ii) exchange traded products (comprising Exchange Traded Funds, Exchange Traded Commodities and Vehicles), (iii)  and  structured
       products (including warrants and certificates), each of which should be regarded as a separate product market.[14]

   27) In previous cases, the Commission has also considered that there is a separate market for equity trading on regulated markets  (exchanges)
       and OTC trading. The Commission noted that the decision for OTC appeared to be determined by  factors  such  as  the  size  of  the  deal,
       specific client requirements and liquidity considerations.[15]

   28) The notifying party defines activities concerned in the present transaction as structuring,  issuance  and  market  making  of  structured
       derivatives based on one or more underlying asset classes such as equity, commodities and fixed income.

   29) Structuring of financial products consists in designing tailor made products for customers. The design involves choosing  or  building  an
       underlying (e.g. a basket of stocks, a custom-made index, a combination of stocks, commodities, foreign exchange, interest rates  products
       etc.), wrapping the product(s) in the adequate legal wrapper (e.g. insurance policy, collective  investment  scheme,  fund,  term  deposit
       etc.) and testing the behaviour of the product on historical data.

   30) Market making consists in selling and  buying  from  clients  and  making  profit  on  price  differentials.  Market  making  is  done  by
       brokers/dealers that accept the risk of holding certain number of financial instruments in order to facilitate their trading.

   31) The notifying party agrees with the previous assessment of the Commission that structured investment products  should  be  regarded  as  a
       distinct category of products alongside cash equities, bonds or equity derivatives. Furthermore, the notifying party also agrees that  the
       market for structured investment products could be further segmented into (i) exchange traded structured investment products  (hereinafter
       "ETSIP") and (ii) wholesale structured investment products, offered OTC.

   32) The market investigation largely confirmed that the market can be segmented  at  (i)  ETSIP  comprising  products  listed  and  traded  on
       exchange, including notes, warrants and certificates and (ii) Wholesale Structured Products, traded over the counter.[16]

   33) For the purpose of the assessment of the present  case  the  market  would  be  segmented  at  ETSIP  and  wholesale  structured  product,
       nevertheless, the precise product market definition can be left open, since it is unlikely that the proposed transaction would  give  rise
       to serious doubts as to its compatibility with the internal market under any alternative market definition.

1 ETSIP

   34) The category of ETSIP includes listed structured products, notes, and certificates and exchanged traded funds. They are issued by  product
       issuers such as the Parties. These products are standardized across the range of providers which allows them to be  listed  on  exchanges,
       where they are made accessible, along with stocks, bonds, futures, etc. to retail clients and financial institutions.

   35) The notifying party considers that stocks, bonds, and listed equity derivatives do not belong to the same market as ETSIP, since there  is
       limited substitutability between them. The notifying party submits that the relevant market  ought  to  be  limited  to  ETSIP,  including
       warrants and certificates.

   36) The notifying party submits that providers advertise their products through four main channels (i) brokers, (ii) mailing lists  of  retail
       and institutional investors, (iii) media (including the press), and (iv) proprietary websites. Retail customers purchase  and  sell  ETSIP
       via brokers, generally independent from the issuer.

   37) The notifying party argues that the ETSIP should not be subdivided according to the  underlying  products  (equities,  commodities,  fixed
       income), and referred to several reason pointing against this segmentation. First, clients  choose  between  various  ETSIP  with  various
       underlying depending on the yield target and pay-out characteristics (in accordance with their risk appetite) and the selection  does  not
       focus on the underlying asset class. Second, many ETSIP combine several  asset  classes  as  underlying  (so  it  would  be  difficult  to
       distinguish segments for those ETSIP). Finally, in general, ETSIP have homogenous pay-out and wrapper characteristics irrespective of  the
       underlying. These characteristics make ETSIP with different underlyings perfectly comparable and  interchangeable  from  the  demand  side
       perspective.

   38) The notifying party argues that for similar reasons ETSIP should not be subdivided according to the  type,  e.g.  investment  products  or
       leverage products, since in fact, clients often combine various products and also change their choices depending to their risk appetite in
       a given moment.

   39) The market investigation revealed a degree of supply side substitutability between the structured exchanges traded  products  and  stocks,
       bonds, and listed equity derivatives.[17] Nevertheless, the market investigation also revealed that structured products are  legally  debt
       products and cannot seamlessly replace equity products like stocks. Competitors also pointed out that the issuance and listing of exchange
       traded derivatives such as warrants and certificates require less administration compared to the listing of company's shares or bonds on a
       stock exchange. Further, warrants and options could be considered as financially equivalent,  nevertheless  the  ETSIP  are  designed  for
       retail customers while listed equity derivatives are rather dedicated to professionals. Lastly, ETSIP imply different type and  risk  when
       compared to stock, bonds and listed equity derivatives.[18]

   40) From the demand side, the market investigation revealed limited substitutability between the ETSIP and stocks, bonds,  and  listed  equity
       derivatives.[19] Market participants indicate that the levels of return and risk are very different for an investment in stocks  or  bonds
       compared to listed equity derivatives for which the risks and complexity are higher. It is difficult  for  a  customer  to  replicate  the
       market exposure and pay-off structures with other financial instruments. Therefore, on balance, the  market  investigation  confirmed  the
       line proposed by the notifying party, i.e. that the ETSIP could be considered as a separate market excluding  stocks,  bonds,  and  listed
       equity derivatives.

   41) In addition, the market investigation largely confirmed that a market for ETSIP should not be further segmented  based  on  the  different
       underling asset classes (equities, commodities, fixed income).[20]

   42) Lastly, some competitors identified a separate market segment for "mini futures" products within the market  for  ETSIP.[21]  Mini-futures
       are a type of leverage product a category which comprises (i) leverage products without knock-out (warrants and spread warrants), leverage
       products with knock-out (knock out warrants, mini-futures  and  double  knock-out  warrants)  and  constant  leverage  (constant  leverage
       certificates). The market investigation, however, made clear that both from the demand-side and the supply-side it would not be  justified
       to consider mini-futures as a separate market segment: customers switch easily, and it  is  largely  the  marketing  choice  of  suppliers
       whether they focus on this segment or not. In particular, the mini-futures have similar characteristics to knock-out warrants  and  double
       knock-out warrants and any provider of ETSIP can easily provide also the mini-futures products.

   43) In view of the findings of the market investigation, the Commission considers that for the purpose  of  the  present  case  the  narrowest
       product market definition encompasses all structured ETSIP.

2 Wholesale Structured Investment Products

   44) Wholesale structured investment products are traded OTC, issued by financial institutions and sold to  another  financial  institution  to
       address their needs (such as hedging, investment or balance sheet management) or for them to distribute them to  their  clients  or  as  a
       hedge related to structured products distributed to their clients.

   45) Wholesale structured investment products are generally based on one underlying asset class (e.g., equities,  commodities,  fixed  income),
       but can also include a combination of different asset classes ("hybrid structured products"). They can be sold using various  legal  forms
       or "wrappers", such as notes / certificates, OTC instruments  covered  by  standard  International  Swaps  and  Derivatives  Association's
       contracts, structured deposits, funds and collective investment schemes or insurance policies.

   46) The notifying party submits that the market for wholesale structured investment products should not be further segmented.

   47) The market investigation confirmed that a further segmentation of the wholesale structured investment products  based  on  the  underlying
       asset class (equities, commodities, fixed income) is not appropriate. Competitors point out that from the supply side, issuers can  rather
       easily adapt the classes of underlying assets according to the demands of investors.  Further,  some  products  are  multi-asset  and  the
       diversification would not be accurately reflected under a segmentation based on the underlying asset classes.[22]

   48) Consequently, in view of the result of the market investigation the Commission considers that for the purpose of  the  assessment  of  the
       present transaction as regards the structured products  the  narrowest  relevant  product  market  encompasses  all  wholesale  structured
       investment products.

2  Geographic market definition

1 ETSIP

   49) The Commission has previously considered that the market for trading of structured products is likely to be national in scope, since  they
       are designed for specific customer needs that vary from Member State to Member State. Therefore, the Commission considered that structured
       products listed in a particular country are specifically designed for domestic investors and do not seem to attract other investors.[23]

   50) The notifying party submits that the market should be deemed to be EEA-wide from a supply-side perspective, while it may be considered  as
       national from a demand-side perspective.

   51) Regarding the supply side, the notifying party submits that there are no legal or regulatory barriers to  entry  preventing  international
       banks from issuing ETSIP throughout the EEA. Consequently,  the  ETSIP  suppliers  are  either  international  banks  with  a  significant
       investment banking division using their economy of scale or local banks with a large retail network.

   52) From the demand side, ETSIP are designed for retail clients (albeit are bought also by financial institutions) and customers have very low
       or no barriers to buy ETSIP from any exchange in the EEA. The notifying party admits, however, that some retail clients buy  the  products
       on the national markets since they are tailored to local clients' need.

   53) In view of these considerations, the narrowest geographical market for the issuance, structuring and  market  making  of  ETSIP  would  be
       national in scope. The market investigations confirmed that market should be considered as national in scope since the competition between
       suppliers takes place at the national level.[24]

2 Wholesale Structured Investment Products

   54) The Commission has not previously analysed the geographic market for structured products offered OTC, i.e. for  the  wholesale  structured
       investment products.

   55) The notifying party submits that the market for wholesale structured products is EEA in scope. In fact  in,  general  these  products  are
       offered by international banks operating from New York, London and Hong Kong. In Europe, suppliers operate either from London exclusively,
       or from London and a local historical hub. The legal documentation of most wholesale structured products is  drafted  in  English  and  is
       governed by English law, and each product is sold in one or many European Member States. The EU  regulation  in  the  field  of  financial
       services, namely the Prospectus Directive and the Directive relative to Undertakings for Collective Investments in Transferable Securities
       (the "UCITS Directive"), allows the issuers to structure the product in one Member State under an issuance program approved by a  national
       regulator and to passport it to another Member States for subsequent distribution to the public.

   56) From the demand side, in the EEA customers purchase wholesale structured products mainly in London. Clients may ask suppliers to structure
       the product to address national preferences such as national currency, local underling stocks etc., nevertheless the structuring,  pricing
       and trading is generally performed in London or in the local historical hub.

   57) With respect to the proposed transaction, the wholesale structured products are only issued from  London,  to  clients  based  in  Europe.
       Consequently, the Parties consider that the market for wholesale structured investment products is EEA in scope.

   58) The market investigation was inconclusive regarding the level at which competition between  suppliers  of  wholesale  structured  products
       takes place, but the majority of the respondents indicated that the market should be consider as EEA wide or global in scope.[25]

   59) In view of the results of the market investigation and the fact that as regards the proposed transaction is concerned  all  the  wholesale
       structured investment products are issued from London to customers in the EEA, it can be considered that the market is at least  EEA-wide.
       However, the precise geographic market definition as regards the wholesale structured products  can  be  left  open,  since  the  proposed
       transaction is unlikely to give rise to serious doubts as to its compatibility with the internal market under any  alternative  geographic
       market definition.

3 Competitive assessment

1 Equity derivatives

   60) The proposed transaction leads to limited horizontal overlaps regarding the equity derivatives  market  and  its  respective  sub-segment,
       which do not result in any affected markets, since the combined market shares of the Parties would not exceed 20%.

   61) On the market for flow equity derivatives, the Parties’ combined market share in the EEA amounts to around [10-20]% with an  increment  of
       [0-5]% for the Target Business. Thus, the transaction does not give rise to serious doubts regarding its compatibility with  the  internal
       market. The same conclusion can be reached regarding the segments for equity  financing  and  corporate  derivatives  where  the  combined
       markets shares are well below [20-30]%: below [0-5]% and below [0-5]% respectively. The Parties’ combined market shares will be even lower
       if the market is considered to be global in scope.

   62) Furthermore, the notifying party notes that market share data is in this case very conservative. First,  the  revenues  generated  by  the
       Target Business will not replicate in BNPP post-transaction due to expected clients attrition and the impossibility to transfer  for  some
       revenues. Second, since these are instruments traded OTC there is limited availability of accurate and complete data on the  size  of  the
       market for equity derivatives, and, thus, the data is based on revenues generated in Europe by top 10 capital market  players,  which  are
       estimated to account for approximately 79% of the market. Should the data be based on the total market volume, the Parties’  shares  would
       be even lower.

   63) The market investigation confirmed that the Parties are not particularly close competitors in the market for equity  derivatives  and  the
       market is composed by several other players among which Commerzbank, Deutsche Bank and Société Générale.[26] Furthermore, the merger  will
       not remove a particular important competition source, since vast majority of  the  respondents  do  not  consider  RBS  as  an  aggressive
       competitor.[27] The market investigation indicated that the transaction will not have material impact or will have very limited impact  on
       this market segment.[28]

   64) Based on these arguments, the Commission considers that the proposed transaction does not raise serious doubts  as  to  its  compatibility
       with the internal market.

2      Structured investment products

1 ETSIP

   65) The proposed transaction leads to affected markets in the Netherlands and in Sweden.

   66) In the Netherlands the combined market share amounts to [40-50]%; however there is very limited increment, since BNPP had a  market  share
       of [0-5]% in 2012 and [0-5]% in 2013. Thus, the proposed transaction  does  not  raise  competition  concerns  as  regards  ETSIP  in  the
       Netherlands.

   67) In Sweden the Parties’ combined market share in 2013 amounts to [30-40]% with an increment  of  [10-20]%  for  the  Target  Business.  The
       combined market share is lower, [10-20]%, with an increment of [10-20]% for the Target Business if viewed as an average of the  last  five
       years, in order to discount for the volatility of market shares (see Table 1 below). Post transaction, BNPP will  be  the  market  leader;
       however it will continue to face competition in Sweden from Commerzbank ([20-30]% market  share  in  2013),  Handelsbanken  ([5-10]%)  and
       Société Générale which has also entered this market recently and gained market share of [5-10]% in 2013.

   68) The notifying party notes that, similarly to the case of equity derivatives, the theoretical combined market shares on  the  ETSIP  market
       provide a very conservative view, since the revenues of the Target Business will not be simply replicable within BNPP post-transaction.

   69) Furthermore, the notifying party emphasises very high market shares volatility in the Swedish market for ETSIP issuance,  structuring  and
       market making. In fact, the data provided by the notifying party shows that BNPP market share has increased from [5-10]% in 2012  to  [20-
       30]% in 2013 (see Table 1 below). The notifying party explains this rapid expansion of its market share by the success of  a  new  product
       launched in Sweden which addressed clients’ demand that previously had not been identified. The significant increase in the  market  share
       indicates that customers can switch easily their issuers of ETSIP, and that the market is highly contestable. This is further  illustrated
       by the fact that, Commerzbank, the market leader, had a market share of [30-40]% in 2012 which dropped significantly to [20-30]% in  2013.
       The same observation can be made regarding the local bank Handelsbanken which had market share of [20-30]% in 2012 and  [5-10]%  in  2013.
       Market share data for the past 10 years indicates that high volatility is a structural characteristic of the market.

Table 1. Market shares of BNPP and the Target Business in ETSIP in Sweden over the last five years:

     Sweden |2009 |2010 |2011 |2012 |2013 |Average 2009-2013 | |BNPP |[0-5]% |[0-5]% |[0-5]% |[0-5]% |[20-30] |[5-10] | |RBS  |[5-10]%  |[5-10]%
     |[10-20]% |[10-20]% |[10-20]% |[10-20]% | |

   70)  The notifying party considers that the Parties’ combined market share should be viewed as a snapshot of the ETSIP market in Sweden  in  a
       given point in time and should not be considered as a reliable description of the weight of the Parties on this market.

   71) The notifying party further emphasised that customers are self-advised retail clients who purchase products on the exchange in  accordance
       with their investment strategy, showing little loyalty to a specific product provider and typically holding portfolios  of  products  from
       different ETSIP issuers.

   72) The market investigation revealed that the majority of the respondents perceived the Parties as close competitors on the market for  ETSIP
       in Sweden. However, the majority of the respondents consider that an issuer active in one of the  sub-segments  of  structured  investment
       products in Sweden, can easily start offering structured investment products in another segments without incurring  significant  costs  or
       facing other barriers.[29] Furthermore the market investigation confirmed that the ETSIP market  is  highly  volatile:  BNPP  and  Société
       Générale are the recent new entrants in this market and already gained high market shares;  respondents  also  explained  that  all  major
       European and American players are present in Sweden in the market of ETSIP.[30] Overall, companies who are  interested  in  entering  this
       market would face low entry barriers, consisting mainly in regulatory requirements or good knowledge of the local demand.[31]  Ultimately,
       the respondents unanimously indicate that the market for ETSIP in Sweden will remain competitive following the transaction.[32]

   73) In general as regards the market for ETSIP, the Parties’ combined market shares will be lower if the market is considered to  be  EEA-wide
       or global in scope.

   74) Based on the above, it can be concluded that, the proposed transaction does not give rise to serious doubts as to its  compatibility  with
       the internal market regarding the market for ETSIP in Sweden.

2 Wholesales Structured Investment Products

   75) Regarding the market for wholesale structured products, the Parties' combined market share in the EEA  will  amount  to  [10-20]%  of  the
       revenues generated in Europe by the top 10 capital market players, with an increment of [0-5]% for BNPP. Since the combined  market  share
       is well below [20-30]%, the proposed transaction does not result in an affected market. The Parties’ combined market shares will  be  even
       lower if the market is considered to be global in scope.

   76) In light of the above, the proposed transaction does not give rise to serious doubts  as  regards  the  market  for  Wholesale  Structured
       Investment Products.

       CONCLUSION

   77) For the above reasons, the European Commission has decided not to oppose the notified operation and to  declare  it  compatible  with  the
       internal market and with the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the Merger Regulation.

                                        For the Commission

                                        (Signed)

                                        Andris PIEBALGS
                                        Member of the Commission
-----------------------
[1]   OJ L 24, 29.1.2004, p. 1 ('the Merger Regulation'). With effect from 1 December 2009, the Treaty on the Functioning of the  European  Union
      ('TFEU') has introduced certain changes, such as the replacement of 'Community' by 'Union' and 'common market' by  'internal  market'.  The
      terminology of the TFEU will be used throughout this decision.
[2]   OJ C 95, 16.04.2008, p.1.

[3]   Turnover calculated in accordance with Article 5(1) of the Merger Regulation and the  Commission  Consolidated  Jurisdictional  Notice  (OJ
      C95, 16.04.2008, p1).
[4]   Case No COMP/M.6166 - Deutsche Börse / Nyse Euronext, recital 254,  case  M.  Case  No  COMP/M.6873  -  INTERCONTINENTAL  EXCHANGE  /  NYSE
      EURONEXT, recitals 18-21.
[5]   Replies to question 21 of Q-1 M.7151 BNP Paribas / RBS - Questionnaire to Competitors.
[6]   Replies to questions 22 and 22.1 of Q-1 M.7151 BNP Paribas / RBS - Questionnaire to Competitors.
[7]   Case No COMP/M.2577 – GE Capital / Heller recital 15.
[8]   Case No COMP/M.2577 – GE Capital / Heller rectial 16.
[9]   Case No COMP/M.3511 – Wiener Boerse et al/Budapest Stock Exchange/Budapest Commodity Exchange / KELER / JV rectial 14.
[10]  Case No COMP/M.2158 – Credit Suisse Group / Donaldson, Lufkin & Jenrette recital 7.
[11]  COMP/M.6873 – INTERCONTINENTAL EXCHANGE / NYSE EURONEXT, recital 75.
[12]  No COMP/M.6166 - Deutsche Börse / Nyse Euronext, recital 452.
[13]  Replies to questions 23 to 23.3 of Q-1 M.7151 BNP Paribas / RBS - Questionnaire to Competitors.
[14]  Case No COMP/M.6166 - Deutsche Börse / Nyse Euronext, recitals 28-30, 67-69.

[15]  Case No COMP/M.6166 - Deutsche Börse / Nyse Euronext, recitals 63-64.

[16]  Replies to question 6 of Q-1 M.7151 BNP Paribas / RBS - Questionnaire to Competitors.
[17]  Replies 7 of Q-1 M.7151 BNP Paribas / RBS - Questionnaire to Competitors.
[18]  Replies to question 7.1 of Q-1 M.7151 BNP Paribas / RBS - Questionnaire to Competitors.
[19]  Replies to question 8.1 of Q-1 M.7151 BNP Paribas / RBS - Questionnaire to Competitors.
[20]  Replies to questions 9 and 10 of Q-1 M.7151 BNP Paribas / RBS - Questionnaire to Competitors.
[21]  Replies to questions 15.1 of Q-1 M.7151 BNP Paribas / RBS - Questionnaire to Competitors.
[22]  Replies to questions 11 and 11.1 of Q-1 M.7151 BNP Paribas / RBS - Questionnaire to Competitors.
[23]  Case No COMP/M.6166 - Deutsche Börse / Nyse Euronext, recital 77.
[24]  Replies to question 12 of Q-1 M.7151 BNP Paribas / RBS - Questionnaire to Competitors.
[25]  Replies to question 13 of Q-1 M.7151 BNP Paribas / RBS - Questionnaire to Competitors.
[26]  Replies to question 24-24.3 of Q-1 M.7151 BNP Paribas / RBS - Questionnaire to Competitors.
[27]  Replies to question 25 of Q-1 M.7151 BNP Paribas / RBS - Questionnaire to Competitors.
[28]  Replies to question 26.3 of Q-1 M.7151 BNP Paribas / RBS - Questionnaire to Competitors.
[29]  Replies to questions 16 of Q-1 M.7151 BNP Paribas / RBS - Questionnaire to Competitors.
[30]  Replies to questions 18 of Q-1 M.7151 BNP Paribas / RBS - Questionnaire to Competitors.
[31]  Replies to questions 19 of Q-1 M.7151 BNP Paribas / RBS - Questionnaire to Competitors.
[32]  Replies to questions 20 of Q-1 M.7151 BNP Paribas / RBS - Questionnaire to Competitors.

-----------------------
 In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC)  No  139/2004
 concerning non-disclosure of business secrets and other confidential information.  The  omissions  are  shown  thus  […].  Where  possible  the
 information omitted has been replaced by ranges of figures or a general description.

                                                                  PUBLIC VERSION

                                                                 MERGER PROCEDURE