To mount a successful “failing firm” defense of a potentially anticompetitive merger, the companies must present strong factual evidence prepared pre-transaction, McGuireWoods London partner Matthew Hall told Global Competition Review in an Aug. 6, 2024, article.
In a rare move, the U.K. Competition & Markets Authority (CMA) announced that it provisionally cleared T&L Sugars’ proposed acquisition of certain Tereos assets despite concerns that the merger could hamper competition in the U.K. sugar market. The agency indicated that evidence gathered from Tereos’ internal documents showed the company consistently failed to meet its strategic objectives and was likely to leave the U.K. market if the merger did not go through.
In the article, titled “CMA provisionally accepts rare failing firm defence in three-to-two sugar merger,” Hall commented that the CMA reviews such evidence carefully before making its determination. “The decision makes it clear that this was a textbook failing firm case under which the most likely counterfactual is closure of the target and therefore exit,” he noted.