Is the approach to "failing" and "flailing" firms in merger control fit for purpose?

“Failing” and “flailing” firm claims have been successful in only a handful of recent cases, most often foundering on agencies’ requirement that there be no less anti-competitive purchaser available. Drawing on EU, UK and US merger guidance and case experience, we suggest a streamlined approach to claims involving agencies assessing, to a balance of probabilities standard, two questions: (1) Whether the allegedly failing firm would have exited the market but for the merger? (2) Whether that firm made unsuccessful but good-faith efforts to elicit reasonable alternative offers for the purchase of the firm, or its relevant assets, from a less anti-competitive purchaser? We suggest that agencies should take greater account of documentary material produced by the failing firm and its advisors and, at moments of global financial upheaval such as the Global Financial Crisis and the Covid pandemic, should give greater recognition to evidenced flailing firm claims as part of a dynamic assessment of a merger’s competitive effects.