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The fairest of them all? Rival bidder counterfactuals in Australian merger clearance

Morelle Bull and Danielle Wood
(2012) 19 Competition and Consumer Law Journal 231

 

Abstract

'When assessing the competitive effects of acquisitions in which there is more than one potential acquirer, the ACCC tends to take the acquisition by a rival bidder as the ‘counterfactual’ against which the acquisition is compared. The Metcash case is just one of many examples of the ACCC adopting this ‘beauty contest’ style approach. This article reviews the ACCC’s approach to assessing mergers with multiple bidders and compares this with the approach taken by overseas regulators. It considers some of the conceptual and evidentiary challenges inherent in adopting rival bidder counterfactuals and argues that in most circumstances it will be appropriate for regulators assessing acquisitions with multiple potential bidders to adopt a ‘status quo’ counterfactual.'

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