Which of the following refers to a situation in which the merger of companies results in over 25% of the market in the hands of the merged companies ?
‘Share of supply’ test
Under the UK merger control regime of the Fair Trading Act, 1973 (in force till the Enterprise Act, 2002), a merger qualified for reference to the Monopolies and Mergers Commission if it met either of two jurisdictional tests.
The share of supply test was met when, as a result of the merger, at least one quarter (25%) of the goods or services of any description supplied in the UK (or a substantial part of it) came into the hands of the merged enterprises. This is the situation described in the stem.
The asset test, by contrast, looked at the size of the business taken over: it was met when the gross worldwide assets of the enterprise acquired exceeded a set money threshold, regardless of market share.
A gateway condition belongs to restrictive trade practices law: it was one of the statutory grounds on which a restrictive agreement could be justified before the Restrictive Practices Court. A restrictive practice itself is an agreement that limits competition, not a merger test based on market share.
Hence, ‘Share of supply’ test.
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