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

A competition authority has found that a proposed merger would substantially lessen competition in one regional market only. Which remedy is most likely to be accepted as a structural remedy that resolves the concern?

Divesting the overlapping regional business to an approved independent buyer is the structural remedy. It removes the competitive overlap permanently. Price freezes and reporting are behavioural remedies needing ongoing monitoring, and raising the offer price does nothing to restore competition.

  1. AThe parties divest the overlapping regional business to an independent buyer approved by the authorityCorrect
  2. BThe merged firm promises not to raise prices for three years
  3. CThe merged firm agrees to publish quarterly pricing reports
  4. DThe bidder offers to increase the cash price paid to target shareholders

Explanation

Structural remedies change market structure, typically by divesting overlapping businesses to a suitable independent purchaser. Price promises and reporting are behavioural remedies that require monitoring, and a higher offer price has no effect on competition in the market.

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