— Also termed failing-firm defense. [Cases: Monopolies 20(1). C.J.S. Monopolies §§ 106–111, 115–116, 125.]
“The 1992 guidelines provide a limited defense for failing firms and failing divisions of firms. The defense is available if impending failure would cause the assets of one party to leave the market if the merger does not occur. Thus to establish a failing firm defense, the parties must show that the failing firm cannot (1) meet its financial obligations, (2) reorganize in bankruptcy, and (3) find another buyer whose purchase of the firm would pose lesser anticompetitive risks. The parties must further show that (4) without the merger, the failing firm’s assets will exit the market.” Ernest Gellhorn & William E. Kovacic, Antitrust Law and Economics in a Nutshell 398–99 (4th ed. 1994).
