Canada's Thomson won European regulatory approval Tuesday to buy news and information provider Reuters Group but must sell off financial research units to eliminate antitrust concerns, the European Commission said.
EU antitrust regulators said the two companies had also agreed with the U.S. Department of Justice to divest divisions that supply financial-market research reports, earnings estimates, basic financial data on businesses and economic data archives.
The EU said this was necessary to make sure financial institutions and customers of these products were not faced with "a reduced choice, the likelihood of price increases and a severe risk of discontinuation of overlapping products."
EU Competition Commissioner Neelie Kroes said the two companies had offered a package "that provides strong safeguards that users of financial data will not be harmed by this major consolidation."
Thomson's 8.1 billion pound ($15.9 billion) bid for Reuters would cut the number of major companies selling information and trading systems to the financial services industry from three -- Reuters, Thomson and privately owned Bloomberg LP -- to just two.
The combination of Reuters, founded when Paul Julius Reuter began transmitting stock market quotations between London and Paris via the new Calais-Dover cable in 1851, and relative newcomer Thomson would generate sales in excess of $11 billion and just edge out Bloomberg in market share.
EU regulators said they were unhappy about the original lineup of the deal and were worried that it would have reduced competition for aftermarket broker research reports that analyze securities, industries or markets and supply estimates of future company earnings and information on how a company is performing.
The deal would also have damaged technology companies that supply the terminals which gather and combine this data for customers, the EU said. Thomson-Reuters "would have had the ability and the incentive" to cut them off if it wanted to hike prices.
Selling off the databases -- including assets, personnel and customer base -- satisfies EU worries and would give financial information providers a new alternative supplier, the Commission said.
EU regulators said their investigation and the negotiation of the settlement package was done in parallel with U.S. officials.
"The U.S. Department of Justice announced today that it will propose a settlement agreement with divestitures by the parties which are consistent with the remedies accepted by the Commission," the EU executive said.
Reuters' market share of 23 percent and Thomson's 11 percent would combine for a total Thomson-Reuters Corp. share of 34 percent, according to April figures from Inside Market Data Reference. Bloomberg, founded by New York Mayor Michael Bloomberg, has a 33 percent share.
Reuters and Thomson share the mid-level market for trading customers and could argue that the deal would leave them better placed to compete with Bloomberg for higher-end customers where it currently dominates.
London-based Reuters is also more focused on Europe, while Canada's Thomson is stronger in North America.