Volume 38 (2015) / Issue 3
The Commission’s decisional practice in relation to the failing division defence has evolved. Earlier decisions did not permit the use of the defence where a division was failing but the parent able to continue to provide financial support, even if the parent was not incentivized to continue to support the division. This amounted, effectively, to a presumption that the financial reserves of a parent would be used to support a failing division even if that was not economically rational. Later decisions of the Commission distance themselves from the notion that such a presumption exists. They recognize that allowing failing divisions to exit can be an economically rational decision and where such exit is certain and can be demonstrated using robust and objectively justified financial data, the first limb of the failing division defence is satisfied. This article describes and synthesizes the evolution in the Commission’s decisional practice.
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