Mergers can bring many benefits to the economy by making businesses more efficient and innovative. However, some mergers also have the potential to substantially lessen competition in the market to the detriment of consumers.
The Authority’s role in mergers and acquisitions
We administer a mandatory clearance regime for certain mergers and acquisitions.
When considering a proposed merger, we can only give approval if it is satisfied that the merger is unlikely to have the effect of substantially lessening competition in a market.
The Guidelines provide in-depth information on the laws that govern assessments, the economic and legal analysis conducted, and the process followed to make a decision.
Substantial lessening of competition test
We assess mergers using the substantial lessening of competition test. This test examines whether a merger is likely to substantially lessen competition in a market, by comparing the likely state of competition if the merger proceeds with the likely state of competition if the merger does not proceed. A lessening of competition is generally the same as an increase in market power, which is the ability to raise prices and reduce the quality of goods and services that would exist if there was a competitive market.