Counterfactual analysis in merger reviews

Journal article


Land, John and Cejnar, Leela Christine. (2012). Counterfactual analysis in merger reviews. New Zealand Universities Law Review.
AuthorsLand, John and Cejnar, Leela Christine
Abstract

The recent Australian Competition and Consumer Commission v Metcash Trading Ltd decision in Australia has left uncertain the correct approach to assessing whether a proposed merger or business acquisition has the likely effect of substantially lessening competition in a market in breach of s 50 of the Australian Competition and Consumer Act 2010 (Cth) or s 47 of the New Zealand Commerce Act 1986. In this article we review the Australian and New Zealand jurisprudence and in summary take the view that assessing whether a merger will result in the likely effect of a substantial lessening of competition in a market requires a consideration of whether there is a real chance, or a real and substantial risk, of such a substantial lessening of competition. part of the assessment of whether there is such a real chance of a substantial lessening of competition is to consider whether in the absence of the proposed merger, there is a real chance of a counterfactual scenario arising under which there would be a materially greater level of competition than if the merger took place. it is not necessary for that purpose to establish that a particular counterfactual scenario is more likely than not to occur or to establish that a substantial lessening of competition is more likely than not to occur. in assessing whether there is a real chance of a counterfactual scenario occurring, the court or regulator should not take account of merely speculative possibilities. however, the court or regulator should not be too ready to dismiss the prospect of a more competitive counterfactual scenario occurring as "speculative" in a situation where the merger participants have a strong incentive to pursue a merger transaction and to argue to the court/regulator that there is no feasible procompetitive alternative to the transaction.

Year2012
JournalNew Zealand Universities Law Review
Web address (URL)http://search.ebscohost.com/login.aspx?direct=true&db=azh&AN=76338348&site=ehost-live
Research GroupThomas More Law School
Publisher's version
File Access Level
Controlled
EditorsC. Rickett
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