Time to Bid Farewell to the Failing Firm Defense? Some Thoughts in the Wake of Nynas/Shell and Olympic/Aegean

Dec 20, 2013

CPI Europe Column edited by Anna Tzanaki (Competition Policy International) presents:

Time to Bid Farewell to the Failing Firm Defense? Some Thoughts in the Wake of Nynas/Shell and Olympic/Aegean by Kyriakos Fountoukakos (Herbert Smith Freehills) and Lisa Geary (Herbert Smith Freehills)

Intro by Anna Tzanaki (Competition Policy International)

Our last edition of the CPI Europe Column for 2013 is dedicated to the “failing firm defense.” Kyriakos Fountoukakos and Lisa Geary (Herbert Smith Freehills) guide us through the recent developments in this area of EU merger control. The failing firm defense doctrine has been firmly in the spotlight in recent years, in view of the persistent difficult economic times in Europe with speculation that the Commission could increasingly accept failing firm defenses. This did not materialize until very recently when the Commission issued two consecutive clearance decisions (Nynas/Shell and Olympic/Aegean) in the short space of a few months. The Commission’s statements in those cases and its overall decisional practice, however, suggest that there is no real relaxation in the Commission’s approach and that the failing firm defense still applies rarely and narrowly and will only succeed in the presence of strong factual evidence. However, the authors argue that the approach in the two cases and the Commission’s approach in past cases involving counterfactual analyses in situations similar to a failing firm s