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Understanding Merger Investigations PDF Print
Under the Fair Competition Act, CAP.326C a merger occurs when two or more enterprises cease being distinct corporate entities. This can be achieved through a process of amalgamation or via joint venture partnership. The merger of Brydens- McAls merger was a prime example of an amalgamation where one company buys a majority shareholding or a significant minority shareholding in another company. A prime example of a merger consummated via joint venture is the Barclays Bank Plc and CIBC Caribbean Limited which created FirstCaribbean Bank Limited. It should be noted that a merger may also include the purchase of assets such as businesses, plant and equipment and intellectual property.

The inclusion of merger control provisions in the Act should not be interpreted as an intention to prevent or restrict in any way the merging process or business expansion in Barbados. It must be emphasised that the Commission will seek to prohibit only those mergers that are likely to result in a substantial lessening of competition and which cannot offer any redeeming benefits that can offset the harm to competition.

Goal of merger investigation

The FCA mandates the Commission to investigate all proposals to effect a merger involving enterprises that control at least 40.0 percent of production or provision of a service of any market in Barbados.

The main aim of a merger investigation is to determine economic impact of the proposed arrangement on other competitors in the same market as well as the welfare effects on consumers. The Commission will seek information regarding the ability of other firms in the market to continue to secure their raw materials and process and distribute their products or services as freely as they did before. An analysis of the findings of the investigation will then be completed and the Commission will decide either to permit or prohibit the merger. The merger may be approved as originally proposed or may be subject to modifications suggested by the Commission to ensure economic and welfare benefits accrue from the merger.

Mergers that are likely to improve competition are likely to be permitted by the Commission. Those that are not likely to improve competition are likely to be prohibited. However if the parties to the merger are able to demonstrate that a merger is likely to produce sufficient productive and distributive benefits, a merger that limits competition may be permitted.

Application Process

An enterprise or group of enterprises seeking to effect a merger should notify the Commission by completing the Merger Application Forms A and B. The Merger Application Form A requires the applicant to provide general information on the background of the companies involved, the type of merger (acquisition, combination or otherwise), the markets affected and estimates level of competition in those markets (market shares of competitors).

The Merger Application Form B is required especially where the proposed merger raises competition concerns under the Act. In such cases the applicant will be required to list the reasons why the merger should be allowed, including the extent to which the merger will bring about economic benefits that will more than offset the negative impact on competition.

The Merger Application Form B is also required one of the firms in the proposed merger faces imminent financial failure. In such cases the parties must demonstrate that the merger represents the least anti-competitive use of the failing business’ assets.

The above application procedure will have to be followed by Digicel and Cingular who recently proposed a major amalgamation of their assets in the mobile telecommunications industry.

Merger investigation and analysis

A merger investigation involves the determination of the relevant market which is affected by the proposed merger and the market shares of the applicant firms. To conduct its investigation the Commission will speak with competing firms, consumers, other regulatory agencies, and a variety of other interested parties.

The relevant market must always be analysed with respect to the goods or services being traded by the companies involved and geographical area wherein the product is traded. The investigation seeks to establish the market strength of the merging firms and the likely level of competition in the market before and after the proposed merger.

A fee structure has been developed to cover the costs associated with an investigation of a proposed merger by the Commission. The fees will vary based on the combined assets of the merger companies and the extent to which the proposed merger is expected to effect competition.

Decision process Having considered all relevant information the Commission then makes a determination permit or prohibit the merger. The Commission may permit or prohibit the proposal unconditionally or it may permit the proposal subject to any conditions it believes may help to moderate any harm to competition. In such cases the firms may be asked to divest specific interests or part of their combined business or operation if the Commission sees this to be the least detrimental alternative to competition.

If you have any query about fair competition, please contact the Commission at 424-0260, 421-2FTC or This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

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