The Commerce Commission (Commission) sometimes receives applications for clearance that claim an otherwise anti-competitive merger or acquisition should be cleared by the Commission because one or more of the parties is failing, or has a failing division, and its assets will otherwise leave the market. This is commonly called the ‘failing firm argument’. The Commission has found that the circumstances of claims that a firm is failing vary and so assesses each case on its facts.
These guidelines outline:
- the types of information that should be included to assist the Commission to assess the merits of a claim that a firm will fail in the absence of the acquisition; and
- the Commission’s methodology for assessing such claims.
The guidelines also set out the additional factors the Commission may consider when a claim is made that a division of a firm, rather than the firm itself, is failing.