EU regulators will formally object this week to the planned merger of Deutsche Boerse and NYSE Euronext , two sources with knowledge of the case said, which may force the companies to offer concessions to ease competition concerns.
The Commission opened an in-depth investigation into the $9-billion (U.S.) deal on August 4, citing concerns about the deal's impact on derivatives and equities.
It has set a December 13 deadline to decide whether to clear or block the merger, which would create the world's largest stock operator.
"The European Commission is expected to send a statement of objections to the parties this week," one of the sources said on Tuesday, declining to provide more details because of the sensitivity of the subject.
This was confirmed by a second person familiar with the case. The first source said the firms had not submitted any remedies to the Commission, which acts as regulator for the 27-member European Union.
A "statement of objections" or charge sheet typically sets out competition concerns identified by the Commission. Deutsche Boerse and NYSE Euronext can seek to allay regulatory worries by trying to persuade the Commission it is wrong or offer remedies to fix the problems identified.
The Commission, which has rarely blocked mergers, said it had no comment.
NYSE Euronext said it would not be surprised if regulators were to formally object to the deal, but that it expected to clear the regulatory hurdle.
"We would not be surprised to receive a statement of objections. I can't confirm the timing. Nothing has been received yet. A statement of objections doesn't prejudge the Commission's final decision," NYSE Euronext spokesman Mark MacGann told Reuters.
"We are confident the merger will be cleared," he said.
Deutsche Boerse declined to comment. Its shares were down 4.6 per cent to 35.83 euros by 1533 GMT.
The exchanges have about two months to propose remedies. They can also request an oral hearing to present their arguments to senior Commission officials and EU representatives.
Analysts said they expected the Commission to formally lay out its concerns to the exchanges, given ongoing moves to regulate the market.
"It was expected that the European Union would have objections. Historically Deutsche Boerse has not been particularly open to competition in clearing or derivatives so it is sensible that the EU raises objections," said analyst Simmy Grewal at research house Aite Group.
"It would be inconsistent of the EU to pass this merger without objections, given they have been moving towards a more competitive market model with initiatives like MiFID and clearing interoperability."
Opponents of the deal have pointed to the stranglehold the combined operators would have over exchange-listed European futures trading.
Sources told Reuters last month the Commission would not impose serious antitrust restrictions on the two exchanges after its regulatory and antitrust arms struck a deal.
But other sources said there are still ongoing discussions within the Commission and there is no formal agreement as yet between the various divisions on the issue.