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ACCA Strategic Professional · Advanced Financial Management · Regulatory framework and processes

A competition authority has concerns that a proposed acquisition would reduce competition in one product line. Which action by the acquirer is an example of a remedy that may allow clearance to be granted?

Agreeing to divest the overlapping product line to an independent buyer is a recognised remedy. It removes the overlap that causes the competition concern, so the authority may clear the deal. Changes to premium, consideration form or board composition do not affect market competition.

  1. AAgreeing to divest the overlapping product line to an independent buyerCorrect
  2. BIncreasing the bid premium offered to target shareholders
  3. CSwitching the consideration from shares to cash
  4. DAppointing additional non-executive directors to the acquirer's board

Explanation

Structural remedies such as divesting overlapping businesses directly remove the competition concern, so authorities may clear the deal. Changing the premium, the consideration type or board composition does not alter market structure and so does not address the competition issue.

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