Failing Firm Defence in the European Union. A Panacea for Mergers?

This article deals with the assessment of a merger involving a failing firm. Competition authorities have recognised the importance of a merger/acquisition in avoiding bankruptcy as well as the impact of the failing firm defence on entry in the market and the role of potential dynamic or innovative efficiencies and have taken into account the financial distress in which a company may be. They have considered such issues in the assessment of mergers involving failing firms. Both the European Union and United States merger guidelines mention explicitly the “failing firm defence”. The case law has provided further impetus to the development of the defence in both jurisdictions