Clearance must usually be secured from the relevant competition authorities (such as the European Commission) for proposed mergers or acquisitions. If the proposed transaction could significantly reduce competition in the market (for instance through creating a monopoly) the transaction may be deemed anti-competitive in accordance with various regulations.
Consequently, the transaction may be prohibited; the acquirer may receive a substantial fine; or the transaction may be allowed to continue if certain terms are met, for instance terms requiring the buyer to sell part of their existing business (or part of the target post-acquisition).
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By Jake Schogger - City Career Series