COVID-19: Implications for Mergers Between Competitors


Competition and consumer protection authorities around the world have been kept particularly busy by the COVID-19 outbreak. Our previous newsletter, on the impact of COVID-19 on competition and consumer protection, discussed the responses of competition and consumer protection authorities, including the Nigerian Federal Competition and Consumer Protection Commission (FCCPC or the Commission), to exploitative practices (mainly, price gouging) and to co-operation and collaboration between competitors. It is clear that the lockdown measures implemented in various countries to curtail the spread of this global pandemic has had severe economic implications on businesses across the globe. Recent forecasts predict that the COVID-19 outbreak could cost the global economy US$2.7 Trillion.1 Businesses have experienced a sharp decline in revenue, especially those which operate non-essential services, and many companies have already begun to file for bankruptcy as a result of COVID-19. For example: (x) the jeans brand, True Religion Apparel Inc.;2 (y) Alpha Entertainment, the parent company of XFL, an American football league;3 and (z) the satellite company, OneWeb.4 We expect that there will be a record high number of bankruptcy filings in the coming months.

Given these dire economic conditions, mergers and competition law might not be the first port of call, but they are especially relevant. For instance, struggling businesses could undergo a merger to avoid going bankrupt. Where a merger is between competitors, an analysis of the potential anti-competitive effects of the merger becomes germane. Alternatively, competing businesses could decide to merge in order to combat the societal and economic effects of the outbreak. In this regard, we examine the current regulatory framework for mergers in Nigeria and the possible response of the Commission to the aforementioned scenarios.

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