Competition Law and Competition Implications of Resilience Concentration

1. Introduction

Resilience concentration refers to a situation in which market concentration, merger, acquisition, joint venture, vertical integration, or control over important assets is justified on the ground that it will make an industry, supply chain, infrastructure system, or market more resilient to shocks.

Resilience may relate to the ability of a market to withstand:

supply-chain disruptions;

pandemics;

wars and geopolitical restrictions;

cyberattacks;

natural disasters;

energy shortages;

shortages of critical minerals or components;

transportation disruptions;

sudden demand shocks;

dependence on a small number of suppliers; and

technological or infrastructure failures.

The competition-law problem is that concentration can sometimes increase resilience and sometimes reduce it. A merger may create economies of scale, redundant production capacity and stronger investment capability. But the same merger may eliminate an independent supplier and leave customers dependent on fewer firms.

This tension is increasingly recognized in modern merger-control discussions. The European Commission's 2026 review of its Merger Guidelines specifically includes "competitiveness and resilience" as a subject for merger assessment. Its consultation materials ask whether increased scale creates resilience or instead makes supply chains more exposed because they depend on fewer players. (Competition Policy)

2. Meaning of Resilience Concentration

Resilience concentration can be understood through the following formula:

Concentration + Resilience Objective + Reduced Number of Independent Market Participants = Resilience Concentration

For example:

Suppose an industry has five manufacturers of a critical component. Two manufacturers propose to merge, arguing that the combined company will have greater production capacity, larger inventories and better ability to survive supply disruptions.

The transaction may create:

Potential resilience benefits

greater production capacity;

geographically diversified facilities;

larger inventories;

improved logistics;

stronger research and development;

ability to absorb temporary shortages;

better financial capacity.

Potential competition problems

fewer independent suppliers;

increased market power;

higher prices;

reduced innovation;

weaker bargaining power of customers;

greater dependence upon the merged firm;

increased risk if the merged firm itself suffers a disruption.

Therefore, resilience is not automatically synonymous with concentration.

3. Relationship Between Competition and Resilience

Competition law traditionally focuses on issues such as:

market power;

prices;

output;

quality;

innovation;

consumer choice;

entry barriers; and

competitive constraints.

Resilience introduces another dimension:

Can the market continue functioning when an unexpected shock occurs?

A competitive market with several independent suppliers may be more resilient because the failure of one supplier does not necessarily destroy the entire supply chain.

At the same time, excessive fragmentation can also create problems. Small firms may lack the resources to:

maintain strategic inventories;

invest in backup facilities;

develop alternative technologies;

maintain cybersecurity;

diversify geographically; or

withstand major financial shocks.

Thus, competition law must distinguish between efficient scale and harmful concentration.

4. Major Competition Implications

A. Reduction in the Number of Suppliers

The most obvious concern is the reduction of independent suppliers.

If there are:

5 suppliers → merger → 4 suppliers

the immediate concentration may appear limited.

But if there are:

3 suppliers → merger → 2 suppliers

the resilience consequences can be considerably different.

During a supply shock, customers may have very few alternatives.

The Competition Commission/authority therefore needs to examine not merely ordinary market shares but also the availability of credible alternatives during periods of stress.

Recent competition literature specifically identifies the number of credible alternative suppliers available during market stress as an important resilience consideration. (OUP Academic)

5. Creation of Systemic Dependence

A large merged company may become a systemically important supplier.

This can produce a paradox:

The company becomes stronger individually, but the market becomes more vulnerable collectively.

For example, if one company controls:

a major cloud infrastructure;

a semiconductor input;

an important logistics network;

a pharmaceutical ingredient;

an energy transmission facility;

failure of that company could affect the entire downstream market.

Therefore, competition authorities may examine dependency, not simply market share.

6. Supply-Chain Resilience

Supply-chain resilience is particularly important where production depends upon a limited number of suppliers.

Concentration may provide:

Positive effects

integrated production;

economies of scale;

better inventory management;

better forecasting;

greater financial resources;

stronger logistics;

coordinated production.

Negative effects

single-source dependence;

elimination of alternative suppliers;

increased switching costs;

greater bargaining power;

foreclosure;

strategic withholding;

higher prices during shortages.

The UK's competition-policy discussion has expressly recognized that economic resilience can be enhanced by multiple sources of supply, while excessive concentration can create dependence and systemic risks during economic vulnerability. (GOV.UK)

7. Resilience as an Efficiency Defence

A merging party may argue:

"The merger is necessary because the combined business will be more resilient."

Competition authorities should not automatically reject this argument.

Instead, the authority can ask:

Four important questions

1. Is the resilience benefit real?

Is there credible evidence that the merger will actually increase resilience?

2. Is the benefit merger-specific?

Could the same resilience be achieved through:

contractual arrangements;

joint purchasing;

insurance;

inventories;

technological investment;

supply diversification;

capacity expansion?

3. Does the benefit reach customers?

A purely internal benefit to the merged company may not constitute a sufficient competitive justification.

4. Is the benefit greater than the competitive harm?

The authority should examine whether the resilience benefit offsets the reduction in competitive constraints.

8. Short-Term Versus Long-Term Resilience

An important distinction is:

Short-term resilience

Ability to survive an immediate shock.

Example:

maintaining emergency inventory;

maintaining spare capacity;

alternative logistics.

Long-term resilience

Ability to maintain innovation, investment and competitive supply over many years.

A merger could improve short-term resilience by increasing capacity while reducing long-term resilience by eliminating an independent innovator.

Therefore, competition authorities should consider both time periods.

9. Horizontal Resilience Concentration

Horizontal concentration occurs when competitors combine.

Example:

Manufacturer A + Manufacturer B → Manufacturer AB

This is the most obvious resilience issue because the number of independent suppliers decreases.

Potential concerns include:

unilateral market power;

coordinated effects;

higher prices;

reduced innovation;

reduced capacity diversity;

elimination of potential competitors.

The EU framework recognizes that mergers can reduce competition by creating or strengthening dominant players, potentially causing higher prices, reduced choice, quality or innovation. (Competition Policy)

10. Vertical Resilience Concentration

Vertical concentration occurs when companies operating at different levels of the supply chain combine.

Example:

Raw-material producer + manufacturer

Possible benefit:

guaranteed supply;

better coordination;

investment in capacity.

Possible competition concern:

input foreclosure;

raising rivals' costs;

discriminatory supply;

refusal to supply;

exclusive dealing.

Consequently, vertical integration may improve the merged company's resilience while making competing downstream firms less resilient.

11. Conglomerate Resilience Concentration

A large company may acquire businesses operating in several connected markets.

This may produce:

technological integration;

financial diversification;

shared infrastructure;

cross-market efficiencies.

But it can also create:

tying;

bundling;

cross-subsidisation;

data advantages;

ecosystem dependence;

exclusion of smaller competitors.

The competition authority therefore needs to assess whether resilience gains arise from genuine efficiencies or from increased market power.

12. Resilience and Entry Barriers

Concentration may increase entry barriers.

A large incumbent may control:

infrastructure;

patents;

data;

distribution networks;

raw materials;

customer relationships;

intellectual property;

logistics systems.

A new entrant may technically be able to enter but may be unable to replicate the incumbent's resilient infrastructure.

This makes dynamic competition particularly important.

The U.S. merger guidelines similarly recognize that mergers can be problematic where they entrench an existing dominant position or eliminate potential entry, particularly in concentrated markets. (Justice.gov)

13. Resilience and Innovation

Resilience may require innovation.

For example:

alternative production technologies;

substitute materials;

new energy sources;

cybersecurity systems;

decentralized networks;

alternative logistics.

A merger between major innovators may reduce this competitive experimentation.

Therefore:

Technological redundancy can itself be a form of resilience.

If two companies are independently developing alternative technologies, preserving both may provide greater resilience than combining them into one R&D organisation.

14. Resilience and Coordinated Effects

Concentration may also facilitate coordination.

If five competitors become three, the remaining companies may find it easier to observe one another and coordinate behaviour.

The U.S. merger guidelines expressly identify increased risk of coordination as a potential basis for finding that a merger substantially lessens competition. (Justice.gov)

This is important because a market may appear resilient in terms of physical capacity but become less competitive because remaining firms can coordinate more easily.

15. Geographic Concentration

Resilience is also affected by geographic concentration.

Suppose a company operates ten factories, but all ten are located in the same geographical region.

The company may appear highly diversified from a business perspective, but a:

flood;

earthquake;

war;

energy failure;

cyberattack; or

transportation disruption

could affect all facilities simultaneously.

Therefore, competition analysis may consider geographic diversification of productive capacity.

16. Resilience and Essential Inputs

Resilience concentration becomes particularly important in markets involving:

semiconductors;

medicines;

agricultural inputs;

energy;

telecommunications;

cloud infrastructure;

transportation;

food distribution;

critical minerals;

financial infrastructure.

The competition authority may examine whether the merger increases dependence upon one supplier.

17. Remedies for Resilience Concentration

Competition authorities may use several remedies.

Structural remedies

divestiture of production facilities;

sale of brands;

transfer of intellectual property;

divestiture of customer contracts;

sale of distribution centres.

Behavioural remedies

non-discrimination obligations;

supply commitments;

licensing;

access obligations;

interoperability;

information firewalls.

Hybrid remedies

A combination of:

divestiture + licensing + supply commitments + monitoring.

The objective is to preserve both resilience and competitive independence.

18. Important Case Laws

Case 1: Tata Steel/Thyssenkrupp — Case M.8713

This European Commission merger case concerned the proposed joint venture between Tata Steel and Thyssenkrupp in the European flat-carbon steel sector.

The Commission ultimately declared the concentration incompatible with the internal market in 2019. The case involved concerns about the competitive structure of important steel markets. (Eur-Lex)

Competition relevance

Steel is a strategically important industrial input. A concentration can potentially create:

fewer suppliers;

greater dependence on large producers;

reduced competitive pressure;

reduced customer choice.

The case is particularly useful when analysing the argument that industrial scale and international competitiveness must be balanced against competitive diversity.

Principle

Industrial scale does not automatically justify elimination of important competitive constraints.

19. Case 2: Hutchison 3G UK/Telefónica UK — Case M.7612

This proposed acquisition involved Hutchison's Three and Telefónica's O2.

At the relevant time, the UK mobile market had four major network operators. The European Commission prohibited the transaction because it considered that the merger would significantly impede effective competition. (Eur-Lex)

The General Court subsequently considered the case in CK Telecoms UK Investments Ltd v European Commission, Case T-399/16. The judgment examined non-coordinated effects, competitive constraints, network-sharing arrangements and market concentration. (Eur-Lex)

Resilience relevance

Telecommunications networks are infrastructure-heavy markets.

Reducing the number of independent network operators can affect:

network investment;

infrastructure competition;

service alternatives;

network redundancy;

technological innovation.

Principle

Network infrastructure can provide both a competitive constraint and an element of economic resilience; merger analysis must therefore examine the effect of removing an independent network operator.

20. Case 3: Bayer/Monsanto — Case M.8084

The European Commission examined Bayer's acquisition of Monsanto in the agricultural sector.

The Commission opened an in-depth investigation and ultimately accepted the transaction subject to extensive commitments. (Eur-Lex)

The case involved agricultural seeds, traits, pesticides and innovation.

In India, the Competition Commission of India also approved the transaction subject to modifications, including divestitures and licensing commitments. The CCI identified potential adverse effects in certain markets and required remedies designed to preserve competition. (Press Information Bureau)

Resilience relevance

Agricultural markets are directly connected to food-system resilience.

Competition among seed and agricultural-technology providers can support:

alternative crop varieties;

drought resistance;

disease resistance;

technological innovation;

farmer choice.

The Canadian competition authority similarly identified concerns about lost rivalry and innovation in seed markets, including innovation directed toward drought and disease resistance. (Competition Bureau Canada)

Principle

Resilience of a critical sector can depend upon preserving multiple sources of innovation rather than merely creating one large supplier.

21. Case 4: Dow/DuPont — Case M.7932

The proposed Dow-DuPont merger was investigated extensively by the European Commission.

The Commission opened a Phase II investigation because the transaction raised serious competition concerns. (Eur-Lex)

The Commission subsequently cleared the transaction subject to commitments. (Publications Office of the EU)

Competition relevance

The case is significant because agricultural and chemical markets involve:

research;

patents;

product development;

agricultural inputs;

innovation pipelines.

Resilience implication

If two major R&D competitors combine, the market may gain financial and technological scale but lose an independent innovation pathway.

Therefore:

R&D diversity may itself be an element of resilience.

22. Case 5: Ball/Rexam

The Ball/Rexam transaction involved major beverage-can manufacturers.

The European Commission required divestments to address competition concerns. The divestment business included multiple production plants and support and innovation facilities. The Commission subsequently examined the acquisition of those divested assets by Ardagh. (Eur-Lex)

Resilience relevance

Manufacturing facilities are important because customers depend on reliable access to packaging.

A merger that removes independent manufacturing capacity may create supply dependence.

Principle

Divestiture can preserve an independent source of supply while permitting efficiencies associated with the broader transaction.

This is particularly relevant to modern resilience analysis.

23. Case 6: FTC v. Sysco Corp. / US Foods

The proposed merger between Sysco and US Foods concerned the U.S. broadline foodservice distribution market.

The FTC argued that the parties were the two largest broadline distributors and that the combined firm would account for approximately 75% of the national market for broadline distribution services. The agency also identified numerous local-market concerns. (Federal Trade Commission)

The U.S. District Court granted a preliminary injunction, finding a reasonable probability that the transaction would substantially impair competition. The parties subsequently abandoned the transaction. (Federal Trade Commission)

Resilience relevance

Food distribution demonstrates the importance of:

distribution centres;

nationwide logistics;

alternative suppliers;

delivery networks;

service capacity.

A very large concentration may produce logistical efficiencies but simultaneously make customers more dependent upon one network.

Principle

Large-scale distribution capacity should not be evaluated only through economies of scale; the availability of independent alternative distribution networks can also matter.

24. Case 7: FTC v. Staples/Office Depot

The FTC challenged Staples' proposed acquisition of Office Depot.

The FTC alleged that the parties were particularly important competitors for large business customers and that the transaction could lead to higher prices and reduced quality. The federal district court granted a preliminary injunction, after which the parties abandoned the transaction. (Federal Trade Commission)

Resilience relevance

The case illustrates the importance of maintaining alternative distribution and supply channels.

If a customer relies on only one or two large suppliers, the failure or disruption of one supplier can have greater consequences.

Principle

Competitive redundancy can provide economic resilience by preserving alternative sources of supply.

25. Comparative Lessons from the Cases

26. Resilience Concentration Under Indian Competition Law

In India, resilience concentration would principally be examined under the Competition Act, 2002, particularly merger/combination control and the prohibition of anti-competitive conduct.

The Competition Commission of India can examine whether a combination is likely to cause an appreciable adverse effect on competition (AAEC).

Relevant factors include:

actual and potential competition;

market share;

extent of entry barriers;

level of concentration;

degree of countervailing power;

availability of substitutes;

economic efficiencies;

nature and extent of vertical integration;

contribution to economic development;

whether benefits outweigh adverse effects.

The Bayer/Monsanto decision is particularly useful in this context because the CCI approved the transaction subject to structural and behavioural modifications. (Press Information Bureau)

27. Resilience Concentration and Essential Facilities

If a concentrated firm controls an essential facility, resilience concerns become more serious.

Examples include:

telecommunications infrastructure;

ports;

rail networks;

payment infrastructure;

cloud computing;

energy grids;

digital platforms.

A competitor may technically exist but may not be able to function without access to the essential infrastructure.

Therefore, competition law may require:

access;

interoperability;

non-discrimination;

reasonable licensing;

fair terms of access.

28. Resilience Concentration and Digital Markets

Digital markets create new forms of resilience concentration.

Examples include:

Cloud computing

A few providers may control enormous infrastructure.

App ecosystems

Developers may depend upon a small number of platforms.

Digital payments

Concentration may create systemic operational risks.

Search and advertising

A dominant platform may control important data and distribution channels.

AI infrastructure

Concentration may occur around:

advanced computing;

GPUs;

foundation models;

cloud infrastructure;

datasets;

AI distribution channels.

In such markets, resilience requires considering not only the number of firms but also:

whether users can realistically switch when a major provider fails.

29. Resilience and Data Concentration

Data can create resilience concentration when one company controls a critical dataset.

A merger can combine:

customer data;

behavioural data;

transaction data;

location data;

industrial data.

This may make the merged entity more capable of surviving competitive shocks while simultaneously making competitors dependent upon it.

Competition analysis therefore needs to consider:

data portability;

interoperability;

access to essential datasets;

switching costs;

network effects.

30. Resilience and Network Effects

Network effects can amplify concentration.

For example:

More users → more data → better service → more users → greater market share.

Once concentration becomes sufficiently high, a shock affecting the dominant platform may affect a large portion of the market.

Consequently, authorities may consider whether maintaining several interoperable networks provides greater systemic resilience.

31. Resilience and Failing-Firm Arguments

A company may argue that it must be acquired because it is financially weak.

This can overlap with resilience arguments:

"Without the acquisition, the company may exit and the market will lose its capacity."

Competition law may examine whether:

the firm is genuinely failing;

there is no less anti-competitive alternative;

the assets would otherwise exit;

the acquisition preserves productive capacity;

the acquisition creates more competitive harm than the counterfactual.

The relevant question is therefore not simply:

"Will the merger save the firm?"

but:

"What would happen to competition and supply capacity without the merger?"

32. Resilience and Counterfactual Analysis

A sophisticated competition analysis should compare:

Scenario A — No merger

several independent suppliers;

existing capacity;

potential investment;

possibility of failure.

Scenario B — Merger

larger capacity;

integrated operations;

fewer independent suppliers;

greater financial strength.

Scenario C — Alternative remedy

partial acquisition;

joint venture;

licensing;

capacity-sharing agreement;

divestiture.

This counterfactual approach helps determine whether the merger is actually necessary for resilience.

33. Important Economic Indicators

Competition authorities can examine:

Structural indicators

HHI;

market shares;

number of suppliers;

capacity shares;

concentration ratios.

Resilience indicators

spare capacity;

inventory levels;

geographic diversification;

supplier diversity;

switching possibilities;

time required for replacement;

transport alternatives;

production redundancy.

Competitive indicators

price effects;

innovation;

entry;

customer bargaining power;

potential competition;

coordination risks.

34. Consumer Welfare and Resilience

Resilience should ultimately be connected to consumers.

A resilience benefit may manifest as:

stable prices;

continuous supply;

better quality;

faster recovery;

product availability;

innovation;

security.

But an alleged resilience benefit should not become an unlimited justification for concentration.

For example:

"The company will be stronger after the merger"

does not necessarily mean:

"Consumers will be better off."

The competition authority must establish the connection between the structural change and consumer benefits.

35. Resilience Versus Economic Security

Resilience and national economic security are related but distinct.

Resilience

Concerned with the market's ability to absorb and recover from shocks.

Economic security

May include:

national security;

strategic industries;

defence;

geopolitical dependence;

critical infrastructure.

Competition authorities must be careful not to allow broader industrial-policy objectives to automatically replace competition analysis.

The EU's current merger-guideline review specifically raises questions about whether and how external global dependencies should be balanced against internal dependencies created within the Single Market. (Competition Policy)

36. Key Legal Test

A practical legal framework for resilience concentration can be expressed as:

Step 1 — Define the relevant market

Identify:

product market;

geographic market;

supply chain;

customers.

Step 2 — Measure concentration

Examine:

market shares;

HHI;

number of competitors.

Step 3 — Identify resilience risks

Ask:

How many credible suppliers remain?

How quickly can customers switch?

Are alternative sources available during a crisis?

Is production geographically diversified?

Step 4 — Identify competitive harm

Consider:

price;

quality;

innovation;

access;

foreclosure;

coordination.

Step 5 — Evaluate resilience efficiencies

Determine whether the merger creates:

additional capacity;

redundancy;

investment;

geographic diversification;

technological resilience.

Step 6 — Apply merger-specificity

Could the same benefit be achieved without eliminating a competitor?

Step 7 — Consider remedies

Possible remedies include:

divestiture;

licensing;

access;

supply commitments;

interoperability;

capacity commitments.

37. Advantages of Resilience Concentration

Potential benefits include:

economies of scale;

stronger financial resources;

greater production capacity;

better inventory management;

improved logistics;

geographic diversification;

greater R&D capability;

stronger cybersecurity;

improved infrastructure;

ability to withstand temporary market shocks.

38. Disadvantages of Resilience Concentration

Potential competition problems include:

reduction in competitors;

increased market power;

higher prices;

reduced innovation;

increased dependency;

foreclosure;

higher entry barriers;

coordinated behaviour;

reduced supplier diversity;

systemic risk if the dominant firm itself fails.

39. The Central Paradox

The most important conceptual point is:

Concentration can increase the resilience of an individual firm while reducing the resilience of the overall competitive market.

For example:

Before merger

A = 25%
B = 25%
C = 25%
D = 25%

A+B merger:

AB = 50%
C = 25%
D = 25%

The merged entity may have:

more capital;

greater capacity;

better logistics.

But the market has also lost an independent competitor.

If AB subsequently experiences a major disruption, the remaining firms may not possess sufficient spare capacity to compensate.

This illustrates why firm-level resilience and system-level resilience must be distinguished.

40. Conclusion

Resilience concentration is an emerging issue in modern competition law. It arises where concentration is defended on the ground that larger or more integrated firms can withstand economic, technological, geopolitical or supply-chain shocks.

Competition law should therefore examine both sides:

Potential resilience benefit

Scale → investment → redundancy → capacity → shock resistance

Potential competition harm

Concentration → fewer competitors → dependency → reduced alternatives → systemic vulnerability

The modern approach is consequently not to treat resilience as automatically pro-competitive or anti-competitive. Instead, authorities should examine evidence, causation, merger-specificity, consumer benefits, alternative means of achieving resilience, and the effect on competitive diversity.

The cases of Tata Steel/Thyssenkrupp, Hutchison 3G/Telefónica, Bayer/Monsanto, Dow/DuPont, Ball/Rexam, Sysco/US Foods and Staples/Office Depot demonstrate different ways in which concentration, alternative supply, infrastructure, innovation and competitive redundancy can interact.

The central competition-law principle can be summarized as:

A resilient market is not necessarily the market with the fewest firms or the largest firms; it is a market in which sufficient independent capacity, alternatives, innovation and competitive constraints remain available to withstand disruption.

The European Commission's ongoing 2026 merger-guideline review is particularly significant because it is explicitly considering how competitiveness, scale and resilience should interact within merger assessment. (Competition Policy)

Quick Revision Points

Resilience concentration concerns concentration justified by resilience objectives.

It can arise through mergers, acquisitions, JVs or vertical integration.

Resilience may mean supply-chain, technological, financial or infrastructure resilience.

Concentration can increase firm-level resilience.

Excessive concentration can reduce market-wide resilience.

Supplier diversity can provide competitive redundancy.

Resilience may be considered as an efficiency, but it should be evidence-based.

Merger-specificity is important.

Alternative, less restrictive methods should be examined.

Remedies can preserve both scale benefits and competitive diversity.

Digital markets create new forms of resilience concentration.

Critical sectors require special attention to dependency and alternative capacity.

Bayer/Monsanto illustrates the importance of preserving innovation and alternative agricultural technologies.

Tata Steel/Thyssenkrupp illustrates the tension between industrial scale and competitive structure.

Hutchison 3G/Telefónica illustrates concentration in network infrastructure.

Sysco/US Foods illustrates the importance of alternative distribution networks.

Ball/Rexam illustrates the use of divestiture to preserve independent supply capacity.

Staples/Office Depot illustrates the importance of alternative suppliers for large customers.

Competition analysis should distinguish firm-level from system-level resilience.

The ultimate focus remains the effect of concentration on competitive conditions and customers.