Killer acquisition
Topic: Market Structures, Market Failure and Competition · NCERT: Beyond NCERT
Meaning
A killer acquisition happens when a big incumbent firm buys an innovative start-up mainly to shut down its product. The goal is to remove a future rival before it grows, not to use its ideas. Consumers lose the competition and new products the start-up might have brought. These start-ups often have small assets and small turnover. So such deals used to fall below the asset and turnover limits that trigger merger review by the Competition Commission of India (CCI).
Example
The Competition (Amendment) Act 2023 added a deal value threshold to catch such deals. Any deal worth more than ₹2,000 crore must now be notified to the CCI if the target has substantial business operations in India. This rule has been in force since 10 September 2024. So a large tech firm buying a small Indian app for ₹3,000 crore would now need CCI approval.
Don't confuse with
- Ordinary acquisition (combination): a normal merger usually aims to use the target's business, for example through scale or new markets. A killer acquisition aims to discontinue the target's product and head off competition.
Related concepts
- Network effects
- Two-sided market
- Switching costs
- Winner-takes-all market
- Gatekeeper platform
- Self-preferencing
- Anti-steering
- Deep discounting