An amalgamation or joining of two or more firms into an existing firm or to form a new firm. A merger is a method by which firms can increase their size and expand into existing or new economic activities and markets. A variety of motives may exist for mergers: to increase economic efficiency, to acquire market power, to diversify, to expand into different geographic markets, to pursue financial and R&D synergies, etc. Mergers are classified into three types:
Horizontal Merger: Merger between firms that produce and sell the same products, i.e., between competing firms. Horizontal mergers, if significant in size, can reduce competition in a market and are often reviewed by competition authorities. Horizontal mergers can be viewed as horizontal integration of firms in a market or across markets.
Vertical Merger: Merger between firms operating at different stages of production, e.g., from raw materials to finished products to distribution. An example would be a steel manufacturer merging with an iron ore producer.
Vertical mergers usually increase economic efficiency, although they may sometimes have an anticompetitive effect.
Conglomerate Merger: Merger between firms in unrelated business, e.g., between an automobile manufacturer and a food processing firm.
Source: OECD
General overview of the key merger control regimes in Canada Competition Act Canada’s Competition Act (the Act) authorises the Commissioner of Competition (the Commissioner) to challenge merger transactions that are likely to prevent or lessen competition substantially in a relevant market affecting Canada. The Commissioner heads the Competition Bureau (the Bureau) which is responsible for…
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On 15 August 2014, the Competition and Markets Authority (“CMA”) approved Alliance Medical Group’s completed acquisition of IBA Molecular’s radioactive medical tracer business. Although IBA’s business was loss-making, would have exited the market and there was no other credible buyer for it, the CMA refused to apply the ‘failing firm’ (or ‘exiting firm’) defence, as…
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70th Lunch Talk of the Global Competition Law Center Tuesday, July 15, 2014 from 12:00 PM to 2:00 PM The New Wave of Concentrations in the Telecommunications Sector: Merger Control Issues and Remedies Michele PIERGIOVANNI, DG COMP Thomas WESSELY, Freshfields Bruckhaus Deringer Programme: 12:00 – 12:30: Sandwich lunch and socializing 12:30 – 13:30: Presentations and…
The Common Market of Eastern and Southern Africa (“COMESA”) is a supranational organisation with 19 Member States: Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe. The COMESA Competition Commission (“CCC”) commenced operations on 14 January 2013 and implements a supra-national…
In our annual forecast of the year ahead for Canadian competition and foreign investment review law, the Davies Competition Law and Foreign Investment Group outlines the “Top 10” key issues and trends to watch for this year. 1. A Green Light for Class Actions by Indirect Purchasers The Supreme Court of Canada issued an important…
On 24 July, the Commission published the non-confidential version of the decision in the Hutchison 3G Austria/Orange Austria case. The case, cleared subject to commitments following a Phase II investigation, represents a significant development in the Commission’s merger enforcement policy because, for the first time, the Commission has applied an Upward Pricing Pressure (UPP)-analysis as…
On 25 June 2013, the European Commission launched a public consultation entitled “Towards more effective EU Merger Control” in which the Commission proposes to (i) expand its powers to review non-controlling minority interests and (ii) streamline the case referral system between the Commission and NCAs. The proposals in respect of minority shareholdings will have a…
