Courts have permitted two or more small companies to merge without liability under Section 7 of the Clayton Act if the merger allows them to compete more effectively with a large company.

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This is known as the "failing firm defense" and is an exception to antitrust laws in certain circumstances. If two small companies are struggling financially and would be forced to exit the market without the merger, and the merger would result in increased competition with a larger company, the courts may permit the merger without liability under Section 7 of the Clayton Act.

Courts Have Permitted Two or More Small Companies to Merge