Failing firm defence

 

Institution Definition

A firm that has been consistently earning negative profits and losing market share to such an extent that it is likely to go out of business. The concept becomes an issue in merger analysis when the acquiring firm argues that the acquisition of such a firm does not result in substantial lessening of competition since it is likely to exit the market anyway. If this is true, the "current" market share of the failing firm may have no "future" competitive significance and should be weighted accordingly. © OECD

 
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