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ARTICLE · 24 DECEMBER 2008

UK Competition Authority Codifies "Failing Firm" Defence To Mergers

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The UK antitrust authority, the Office of Fair Trading (OFT), published on 18 December 2008 a restatement of its position on the "failing firm" defence in merger reviews.

United KingdomAntitrust/Competition Law
Jones Day
Jones Day
Jon Guyett
Jon Guyett
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The UK antitrust authority, the Office of Fair Trading (OFT), published on 18 December 2008 a restatement of its position on the "failing firm" defence in merger reviews. In current economic conditions, this is timely confirmation of the relevant principles and practice. It is also a reminder that mergers that would probably have been blocked in better economic conditions may now be cleared.

The defence allows a claim by the parties to a proposed merger that, because one of the firms is failing, there is no causal link between the merger – and the exit of one of the players and concentration of share and assets in a single player – and the competitive harm that might result.

The failing firm defence is recognised and has been applied by many (but not all) antitrust authorities, including the European Commission, those in many EU Member States, and the U.S. enforcement agencies. To date, the "failing firm" defence has been successfully invoked before the UK

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