DOJ Blesses CBOT-CME Deal

The exchanges clear the last big hurdle that could have prohibited the merger.
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The Department of Justice put its stamp of approval on the merger between the

Chicago Mercantile Exchange

(CME) - Get Report

and

CBOT Holdings

(BOT)

, clearing the exchanges from the last big hurdle that could have prohibited the deal.

"After an extensive investigation of both the Chicago Mercantile Exchange's proposed acquisition of CBOT and the 2003 agreement under which CME provides clearing services to CBOT, the antitrust division determined that the evidence does not indicate that either the transaction or the clearing agreement is likely to reduce competition substantially," the DoJ said in a statement on its Web site Monday.

The Justice Department said that while the CBOT and the CME account for most financial futures traded on U.S. exchanges, "their products are not close substitutes and seldom compete head to head, but rather provide market participants with the means to mitigate different risks."

In addition, the exchanges are unlikely to introduce new products that compete directly with each other's offerings, the DoJ said.

The clearance takes the CBOT one more step away from the

IntercontinentalExchange

(ICE) - Get Report

, which in March launched a surprise rival $11 billion bid for the Board of Trade.

Last month, the CME

sweetened its offer for the CBOT by increasing the amount of stock it will issue to shareholders in its deal, as well as planning a huge buyback for once the deal is completed.

Atlanta-based ICE counterattacked two weeks ago by partnering with privately held

Chicago Board Options Exchange

in order to settle the ongoing dispute between the CBOT and the options exchange in regards to exercise rights that CBOT members hold.

Under the $660 million pact, Board of Trade members will get $500,000 each to compensate them for relinquishing rights to trade at the CBOE. The agreement would settle a long-running dispute that has hampered the CBOE in its efforts to go public.

A spokeswoman for the CBOT was not immediately available. A spokesman for the CME said the exchange would be issuing a statement shortly.

Shares of the CBOT closed up $3.04, or 1.5%, to $201.54. The CME's stock rose $7.44, or 1.4%, to $557.07, while ICE shares climbed $3.56, or 2.4%, to $149.19.

Shareholders are set to vote on the CBOT-CME deal in July.