Commission approves RBS Sempra sale to JP Morgan

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of RBS Sempra Commodities LLP, the commodities trading arm of UK-based Royal Bank of Scotland, by JP Morgan Chase & Co.

After examining the operation carefully, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it and has therefore approved the concentration.

Sempra is primarily active in physical trading of a wide range of commodities and also provides warehousing services for certain of these commodities through its subsidiary Henry Bath & Son Ltd. JP Morgan is a large banking institution and active in the financial trading of commodity derivatives, with limited presence in physical trading. The businesses are in this sense largely complementary. The merger will create an integrated provider of both financial and physical trading services across the major commodity classes.

The Commission’s examination of the deal showed that the horizontal overlaps between the activities of JP Morgan and those of Sempra are limited and that, for all products concerned, the combined firm will continue to face several strong, effective competitors with significant market shares.

The Commission also studied the vertical relationship arising in base metal trading as a result of the warehousing activity of the target, and concluded that there would be no risk of any of the markets concerned being closed off, as there are a number of alternative and competing providers.

This transaction follows on from the undertakings received in relation to the State Aid procedure concerning the restructuring of Royal Bank of Scotland, under the terms of which RBS committed to divest the target business.

The transaction was notified to the Commission on May 10, 2010.