When a company uses the failing firm defense, it must show that alternatives have been tried and have not succeeded in saving the firm.

Question

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The failing firm defense is a legal argument that a company can use to justify a merger or acquisition that would otherwise be in violation of antitrust laws. To use this defense, the company must show that it is on the verge of bankruptcy or would be forced to exit the market without the merger, and that no other alternatives (such as restructuring, downsizing, or finding another buyer) have been successful in saving the firm.

When a Company Uses the Failing Firm Defense, It Must