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AFCA publishes position paper on the Macroeconomic Effects of Mergers in the Context of the COVID-19 Crisis - "Shutdown Mergers"

The position paper aims to facilitate notifications of Shutdown Mergers.

The COVID-19 pandemic and the restrictions put in place to deal with it have triggered a global economic crisis. This year, the number of mergers has been declining: while 439 mergers were notified to the AFCA in 2017, the figure increased to 481 in 2018 and 495 in 2019. This year only 190 mergers were notified so far. The prevailing financial crisis means it is likely that the number of company takeovers will rise in the coming months. However, with more acquisitions comes the danger of a long-term increase in market concentration, which would be to the detriment of consumers and employees, while also having negative effects on economic development and competition.

The Austrian Federal Competition Authority (AFCA) has examined the possible impact of the COVID-19 crisis on competition in depth and published a position paper on the Macroeconomic Effects of Mergers in the Context of the COVID-19 Crisis - "Shutdown Mergers”.

The position paper:

  • looks into mergers caused by COVID-19 (“shutdown mergers”),
  • offers companies a checklist for the assessment of shutdown mergers,
  • explains the criteria applied to assess financially distressed companies,
  • gives an overview of the impact of market power and its macroeconomic effects, and
  • lists possible alternatives to shutdown mergers.

Many companies have had to switch to survival mode from one day to the next. We are expecting the competition conditions in many markets to change in the long term, with an increased number of acquisitions being reported to the AFCA. Our position paper aims to provide useful information to companies that are notifying us of shutdown mergers, ensuring that these merger notifications are handled swiftly and efficiently,” explains AFCA Director General Theodor Thanner.

The position paper is also in German available.

Position paper - Macroeconomic Effects of Mergers in the Context of the COVID-19 Crisis