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The Department of Justice’s Antitrust Division announced Wednesday that it would not stand in the way of mergers undertaken by the two largest stock exchanges. Although stockholders must still approve the mergers, DOJ gave the regulatory blessing for the closing of Nasdaq Stock Market Inc.’s proposed acquisition of Instinet Group Inc. and the New York Stock Exchange’s proposed merger with Archipelago Holdings Inc. “Neither transaction is likely to reduce competition substantially,” DOJ said. Justice officials said they examined whether plans by various organizations to enter the exchange business would offset any potential competitive harm the two major deals pose. DOJ found that plans by several firms, including regional stock exchanges supported by investments from some of the nation’s largest securities firms and investment banks, would be sufficient to resolve such competitive concerns. “Imminent entry of these enterprises should result in additional, viable alternatives to the two merged firms sufficient to ensure that the markets remain competitive,” DOJ said. The NYSE plans to acquire Archipelago, which operates ArcaEx, one of the world’s largest electronic stock markets. In April, Nasdaq announced plans to acquire Instinet, the institutional brokerage and electronic trading network controlled by Reuters Group plc. After the two transactions were announced, several separate enterprises, including the Boston Stock Exchange, the Philadelphia Stock Exchange and BATS Trading Inc., announced their intent to enter equity trading services, listing services and/or the market data service industries. Investors in these ventures include Merrill Lynch & Co., Citigroup Inc., UBS, Credit Suisse First Boston, Morgan Stanley, Goldman, Sachs & Co., Lehman Brothers Inc., Citadel Investment Group LLC and Fidelity Investments. The DOJ approvals came one day after NYSE seatholder William Higgins agreed to drop his suit to block the Archipelago merger after the NYSE agreed to appoint a new independent financial adviser to evaluate the deal. Higgins and other seatholders argue that terms of deal do not come close to adequately compensating them. Under the terms of the agreement, a jointly agreed upon financial adviser will be appointed, and the evaluation will be delivered to the court by Dec. 1. NYSE members are scheduled to vote on the deal on Dec. 6. Copyright �2005 TDD, LLC. All rights reserved.

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