Question

Alter Company Ltd. and Bounder Company Ltd. manufacture the same product, each under their own brand name. Alter Company Ltd.’s product represents 20% of the domestic market, and Bounder Company Ltd.’s product represents 22% of the domestic market. Alter Company Ltd. and Bounder Company Ltd. are considering a merger, with the merged company continuing to sell the two brands as separate products. Would the Competition Tribunal allow this merger? Why or why not? Define and explain any legal concept you use.

Answer 1

The Competition Tribunal is likely to allow the merger of Alter Company Ltd. and Bounder Company Ltd. since their combined market share is below the threshold that could significantly affect competition.

Step-by-step explanation:

The Competition Tribunal would need to consider the concentration ratio in the market to determine whether to allow the merger of Alter Company Ltd. and Bounder Company Ltd. The concentration ratio measures the market share of the top firms in the industry. In this case, if Alter Company Ltd.'s product represents 20% of the domestic market and Bounder Company Ltd.'s product represents 22% of the domestic market, the combined market share of the two firms would be 42%. This concentration ratio is below the threshold where a merger might significantly affect competition. As a result, the Competition Tribunal is likely to allow the merger.