Law360 featured an insightful article today on a recently unsealed court opinion blocking the $367 million merger of rival nuclear waste processing companies.

The court blocked the merger, while rejecting the parties’ argument that the deal should be approved because otherwise the acquired firm would collapse and the market would suffer. The merging companies did not meet the stringent requirements for raising this “failing firm” defense, the court ruled, because they had not shown the lack of other buyers that would not pose competitive concerns.

The article cited BakerHostetler partner Danyll W. Foix as explaining:

the opinion offers a lesson to competition attorneys and their clients, Foix said. Companies with a reason to believe that they may raise a failing firm defense in the future should make a legitimate and well-documented effort to seek out alternative offers, he said.
You need to confirm whether there are other buyers in the market, Foix said.
Of course, that may be easier said than done, Foix said. The bid solicitation process may take a year or longer, and by definition failing firms may not have that kind of time on their hands, he said.

The opinion is United States v. Energy Solutions Inc., et al., Civ. No. 16-1056-SLR (D. Del. June 21, 2017).