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
Complex transactions are subject to an increased level of antitrust scrutiny by competition authorities. This often results in extended waiting periods between signing and closing – it can nowadays be one year or even longer before the parties are able to implement the deal. For the acquiring company it is often important to start planning…
On May 30, 2017, the Bundeskartellamt (Federal Cartel Office, „FCO“) has published guidelines on remedies in German merger control, also available in an English translation, link here. The very detailed guidelines (87 pages) provide a comprehensive and helpful overview and summary of the FCO’s standing remedies practice, as well as of related jurisprudence. The timing…
Summary New German threshold for high value but no/low German sales transactions to enter into force: Imminent changes to merger control will widen jurisdiction to catch (i) high value transactions worth over EUR 400 million with (ii) target substantial German activity even where (iii) the deal would previously not have been notifiable because the target’s…
The European Commission increasingly issues large document requests in complex merger cases. The number of requested documents has increased significantly in recent years, from a few hundred to several hundred thousand, in particular in Phase I or Phase II cases that raise substantial issues. If the document request is issued during the formal proceedings, the documents…
Austria will introduce a transaction value merger notification threshold, which will enter into force on 1 November 2017. The draft law and explanatory notes are available here (in German). In essence, transactions with a transaction value of more than € 200 million, provided the target has “significant” activities in Austria, will potentially require notification. The…
With her delivery of the UK’s Article 50 notice on March 29, Theresa May has launched the two-year negotiating process leading to the first exit of a Member State from the European Union (EU). The negotiations will affect virtually every economic and policy area in Europe, including competition policy. These effects will be felt first…
On 31 March 2017, the German Federal Council (Bundesrat) has voted in favour of passing the ninth amendment to the Act against Restraints of Competition (ARC) (Gesetz gegen Wettbewerbsbeschränkungen). According to the 31 March plenary report[1], the draft law is now about to be presented to the president for signature and will enter into force…
Following the Parliament’s approval in early March, the Federal States Council, Germany’s second legislative chamber, has approved the most recent reform to German competition law on March 31, 2017. The new law will enter into force upon publication in the German official journal, presumably end of April/beginning of May. The reform was triggered by the…
The judgment reinforces due process and transparency in EU merger control proceedings. The Court made clear that due process standards will be strictly enforced in merger cases, despite the relatively tight deadlines. The Decision was, therefore, annulled for failure to respect rights of defence in relation to the handling of economic evidence by the Commission….
We live in a rapidly changing world. The monikers of change are well known to all of us. Trump. Brexit. Eddie Jones. The future is unpredictable. As Joe Cocker sang, “who knows what tomorrow brings”? But let’s climb aboard Elon Musk’s innovative SpaceX Falcon 9 for a moment. Let me take you to another world….
