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21 Competititon L.J. 1 (2022-2023)

handle is hein.journals/comptnlj21 and id is 1 raw text is: 1 The failing firm defence during and post-COVID-19: policy and the evidence required John Bruce,* Mat Hughest and Gemma Smith 1. Introduction The COVID-19 pandemic has caused an unprecedented shock to the global economy over the last two years, and governments in developed countries have responded with an almost unprecedented level of government sup- port. This support has undoubtedly preserved many firms and jobs. However, this government support will be progressively withdrawn, and coupled with expected recent, and expected future, increases in interest rates and the market impacts associated with changes in con- sumers' and firms' behaviour, there is likely to be restructuring in many sectors. This raises the public pol- icy question as to the appropriate balance between gov- ernment support facilitating and ameliorating this restructuring and the role played by merger control, including how the COVID-19 pandemic and its after- math affects the application of the so-called 'failing firm' (or 'exiting firm') defence or scenario (FFD) under UK and EU merger control. * Director, Turnaround and Restructuring, AlixPartners (UK) LLP, London, UK. t Managing Director. Economic Consulting, AlixPartners (UK) LLP, London, UK. Journal compilation © 2022 Edward Elgar Publishing Ltd To consider these questions, this article: - addresses the policy considerations underpinning the FFD under UK and EC merger control; describes the extensive government support, State aid and subsidies provided in the UK in response to COVID-19 and the impact of COVID-19 on various sectors; and provides an overview of the evidence required for the FFD, given these policy and factual considerations. 2. The policy considerations underpinning the failing firm defence The central policy consideration underpinning the FFD is that, where it applies, a reduction in competition is inevi- table regardless of the merger in question. This is because one of the parties would, in the absence of the merger, have exited the market in any event. In other words, the merger S Senior Vice President, Turnaround and Restructuring, AlixPartners (UK) LLP, London, UK. The authors are grateful for the comments of Ben Forbes, Director, Eco- nomic Consulting, AlixPartners (UK) LLP, London, UK. 10.4337/clj.2022.01.01