Zach's small bicycle manufacturing company,Peddle Away,is in dire straits.Zach wishes to merge with the very successful and large bicycle manufacturing company,Bikes Unlimited.There is concern that the merger will violate Section 7 of the Clayton Act.What defense would result in the merger being approved,even if it would otherwise violate Section 7?

Question

Quizplus · Accepted Answer

The "failing company" doctrine allows for the merger of two companies, even if it would otherwise violate Section 7 of the Clayton Act, if one of the companies is failing and will likely go out of business without the merger. In Zach's case, if he can demonstrate that Peddle Away is in such dire straits that it will fail without the merger with Bikes Unlimited, it may be approved despite concerns about antitrust violations.

Zach's Small Bicycle Manufacturing Company,Peddle Away,is in Dire Straits