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The Failing Firm Defense In Times Of Economic Uncertainty

 |  June 1, 2020

By Alyse Stach (The Antitrust Advocate)

As many businesses look for solutions to weather the economic impact of the COVID-19 pandemic, one potential avenue for distressed companies is to seek to be acquired by a more stable firm looking to expand.

The antitrust regulators have made clear that all types of mergers – even during a global crisis – will be subject to ordinary antitrust scrutiny. As those principles are applied, merging companies may look more frequently to the “failing firm” defense to convince regulators that their deal should pass regulatory hurdles when it otherwise might not.

However, the requirements for meeting the failing firm standard are high, and merging parties should not assume that financial struggles during the pandemic will provide a free pass through merger review…