Competition Law Reading Room
The Failing Firm: Its place under Australian merger control
(2009) 17 Trade Practices Law Journal 252
'This article discusses the origin and nature of the failing firm defence in merger cases. It examines the development of the failing firm defence in the United States, and contrasts the position in Australia. The Australian Competition and Consumer Commission’s (ACCC) approach to mergers involving failing firms is examined in detail by reference to recent cases, including recent bank mergers. The article outlines current ACCC guidance and suggests that failing firm mergers are likely to be assessed in line with that guidance in future. The article compares the ACCC’s approach to failing firm mergers with that of United Kingdom and United States regulators. It focuses particularly on the treatment of bank mergers involving “failing” and “flailing” firms, and assesses the impact of the global financial crisis on aspects of merger control. The article concludes that, although failing firm arguments may become more prevalent, the ACCC will continue to limit the application of the failing firm argument, including its application in the financial sector.'