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

A merger is notified to a competition authority that operates a two-phase review. What typically happens in a Phase 2 investigation?

Phase 2 is a detailed in-depth investigation triggered when the initial screening raises serious competition concerns. The authority examines market effects thoroughly and may clear the deal, require remedies or prohibit it. It is unrelated to shareholder votes or the form of consideration.

  1. AA detailed in-depth investigation is carried out where serious competition concerns were found in Phase 1Correct
  2. BThe deal is automatically approved if no objection is raised within one day
  3. CTarget shareholders vote on whether the deal should proceed
  4. DThe acquirer must immediately convert the offer to an all-cash bid

Explanation

Two-phase systems use a short initial screening (Phase 1) to clear unproblematic deals. Where serious concerns remain, a fuller Phase 2 investigation analyses the market in depth and may result in remedies or prohibition. Shareholder votes and consideration form are separate matters.

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