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Nissan (NSANY, 7201.T) shares surged, while Honda (HMC, 7267.T) stock is under pressure as the market reacts to a potential merger between the two Japanese automakers. Former Federal Trade Commission (FTC) commissioner Mozelle Thompson joins Madison Mills to discuss what antitrust hurdles a possible merger would face.
"Each country where these companies operate has an antitrust regulator, and they're going to look closely at how this affects their local market," Thompson says, adding, "For example, in the US, Honda and Nissan both have manufacturing plants in the US." If the two companies were to merge, it would create the world's third-largest automaker.
"One of the challenges here is that we don't know exactly what [a potential merger is] going to look like yet. There's been talk about a holding company, there's been talk about collaboration agreements on EVs," Thompson highlights
The former FTC commissioner says to satisfy antitrust concerns, the companies would need to show that a Honda and Nissan merger wouldn't stifle competition. He says they could do so by "arguing that Nissan has a troubled outlook and therefore needs some sort of merger in order to stay competitive in the marketplace."
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Another argument that could appease antitrust regulators is to "show that if to the extent that EVs are going to become a larger part of the American auto buying public market, that this will make them more competitive and make the anti-China growth bigger and better and stronger," Thompson notes.
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This post was written by Naomi Buchanan.