The financial crisis is having a dramatic negative impact on M&A activity. Between January and May 2009, only 94 concentrations were notified to the European Commission. At this rate, by the end of 2009 the number of notifications will be 35% lower than in 2008. These figures are consistent with reports indicating that global merger activity has decreased by a third in the first quarter of 2009. This decline occurs notwithstanding (a) the drastic reduction in the price of the “targets", (b) the need to consolidate production in response to declining demand, and (c) the increased dependence on internal funding for investment and innovation, which should also encourage consolidation. While the decline in M&A activity is mainly caused by lack of external funding, my own
FOREWORD : MERGER CONTROL - ECONOMIC FINANCIAL CRISIS - CREDIT CRUNCH - REMEDIES - CAPITAL PRODUCT MARKETS - SOUND ECONOMIC POLICY
Merger control & credit crunch
Should merger control take account of the current economic and financial crisis? While there are no credible reasons to support a more or less lenient policy, it is important to recognise that the credit crunch may have an impact on (a) the merger rationale, (b) the pro- and anti-competitive effects of concentrations, and (c) the availability of remedies. Neglecting the interplay between capital and product markets cannot constitute sound economic policy.
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