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
Consistent with recent trends in the United States, the European Union (EU) and many national governments in Europe are expressing renewed interest in greater scrutiny of acquisitions by foreign investors. Government ministers in Germany recently opposed a takeover in the robotics industry by a Chinese bidder, while government ministers in the Netherlands recently opposed a…
Speed read On 31 May 2018, the EU’s Court of Justice (ECJ) gave judgment in the EY / KPMG case on whether the EU suspension obligation was violated when KPMG’s Danish unit terminated a material contract prior to receiving competition clearance for its merger with Ernst & Young (EY). The ECJ concluded that the measure…
On May 14, 2018, the German and Austrian competition authorities have published joint draft guidelines on the new transaction value merger thresholds, including an English translation (see here). Comments can be submitted by June 8, 2018. It would certainly be helpful if members of the legal and economic community from jurisdictions with similar transaction size…
The Senate has approved with minor amendments the Antitrust Bill (the “Bill”) that had been approved by the Chamber of Deputies. The Senate introduced minor amendments to a few articles of the Bill, though none of them are substantial. The amended Bill will now be considered by the Chamber of Deputies and approval is likely…
The UAE Competition Committee held its first meeting of the year last month (on 26 March 2018) in which it discussed the development of guidelines and standards related to the implementation of UAE competition rules, including the UAE merger control regime.[1] The UAE Competition Committee also recently joined the International Competition Network (ICN) and is…
Competition law (especially merger control regime) is a relatively new area of law in India, and the Competition Commission of India (CCI) has been tasked with the duty of its enforcement in India. Similar to most other jurisdictions, the merger control regime in India is suspensory in nature, i.e. the parties to a combination (transactions…
The ability of merging parties to properly participate in the merger review process is premised on the freedom to exchange information and discuss strategies necessary to obtain clearance (subject to all the requisite protections against gun-jumping of course). This freedom to share and exchange information and views is based on the understanding that such communications…
It has been just over a year since I last wrote on EU Merger Control and the Innovation Theory of Harm (the ITOH), see here. And what a year it has been. We still have no real idea what Brexit means. We still do not know who will win the World Cup this year, but…
Background Significant amendments to the Law of Ukraine “On protection of economic competition” came into force on 17 December 2017. The changes are aimed at prohibiting transactions involving persons included in the Ukrainian sanctions list (the Sanctions list). The Sanctions list was introduced by the Law of Ukraine “On Sanctions” following the annexation of Crimea…
As authorities worldwide step up enforcement of their merger control rules, companies planning deals in 2018 must pay even closer attention to their obligations and conduct throughout the period from early planning up to final merger control clearance. We are seeing more authorities impose heavy fines for an increasingly wide range of pre-clearance conduct, with…
