The UK OFT accepts the application of the "Failing Firm Defence" in retail stores acquisition (HMV, Zavvi)

On 14 May 2009, the Office of Fair Trading (OFT), the UK's competition agency, allowed an application of the « failing firm defence » under UK competition law, thereby clearing the HMV/Zavvi retail store acquisitions to proceed. The UK is one of the few jurisdictions to have explicitly recognised such a « defence », and this decision comes only 5 months after the OFT restated its guidance on this subject. The decision demonstrates how the OFT will apply the test to transactions affecting UK markets and reflects the difficult evidentiary burden that a potential purchaser must meet to qualify for the defence. I. Background In the UK, a merger may be blocked by the OFT if it is likely to cause a « substantial lessening of competition ». However, even where there are prima facie competition

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Authors

  • Linklaters (Hong Kong)
  • Cadwalader Wickersham & Taft (Brussels)

Quotation

Marcus Pollard, Vincent Brophy, The UK OFT accepts the application of the "Failing Firm Defence" in retail stores acquisition (HMV, Zavvi), 14 May 2009, e-Competitions Bulletin April 2009, Art. N° 33788

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