Chicago Mercantile Exchange-Chicago Board of Trade Merger

Bobby Willig, Hal Sider, Mark Israel, Thomas Stemwedel, Joanna Tsai, and a Compass Lexecon team in Chicago were engaged by the Chicago Mercantile Exchange (CME) prior to its decision to launch a merger with the Chicago Board of Trade (CBOT). The U.S. Department of Justice expressed serious concerns over both horizontal and vertical anticompetitive impacts during the course of its protracted and intensive investigation. The Compass Lexecon team performed extensive and creative empirical analyses on the competitive impact of the merger. Employing sophisticated financial economics and econometrics, we showed that the futures contracts offered by the CME and CBOT were not close economic substitutes, even the futures contracts based on interest rates. The Compass Lexecon team also proved that the vertically related clearing services offered by CME did not constitute an anticompetitive entry barrier. These economic analyses helped persuade the Department of Justice to close its investigation. We were retained by Ben Crisman, John Lyons, and Jerry Salzman of Skadden, Arps, Slate, Meagher & Flom LLP.