ACCA Applied Knowledge · Business and Technology · Political and legal factors affecting business
Two large supermarket chains announce a merger that would give the combined firm 60% of regional grocery sales. Which action is a competition authority most likely to take?
The authority would most likely review the merger and may block it or impose conditions, such as requiring store disposals. A combined 60% regional share could substantially reduce competition, which merger control is designed to prevent.
- AReview the merger and possibly block it or impose conditions such as selling some storesCorrect
- BAutomatically approve it because the firms agree
- CRequire the firms to adopt a new organisational culture
- DSet the combined firm's staff salaries
Explanation
Competition authorities assess mergers that may substantially reduce competition. With 60% share, they may block the merger or impose remedies like divestment of stores. Agreement between the firms does not guarantee approval, and authorities do not set culture or salaries.
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