Merger Control of IRPs : Automated Route for Distressed Firms?

The Competition Law Review Committee suggested that Insolvency Resolution Plans ("IRPs") that result in combinations unlikely to have an Appreciable Adverse Effect be green-channelled in July 2019. This essentially meant that there would be an automatic acceptance of IRP combinations barring any further merger scrutiny. The above-mentioned recommendation is based on the theoretical basis of ‘failing firm defence’ which permits the parties to into mergers on the underlying condition that the exit of the firm from the market would prove to be more detrimental to the existing competition that the merger. This paper critically analyses the advisability of green-channelling IRPs from the perspective of competition lawIt analyses critically the IRPs examined by the Competition Commission of India and evaluates whether they are treated differently from other mergers.. The paper describes how the ‘failing firm defence’ is being executed to prove that there can be possible anti-competitive effects to green- channelling IRPs without a complete competitive analysis by using the European Union as a point of comparison between the two. The paper concludes on the note that although the failure of the firm is an important aspect while considering mergers, however it cannot constitute as the sole factor to determine their desirability