EU Merger Control Essay

From the liberal point of view, the FTC and the EC should recognize the Boeing-McDonnell Douglas merger as an international issue, not a national issue, so that it should restrain autonomy of state, in this case the U.S., preventing from intervention to protect domestic interests. However, in the case of Boeing-Mc Donnell Douglas, both antitrust authorities, specifically the European Commission, acted in a protectionist manner keeping domestic interests. In a study on 290 proposed acquisitions screened by the EC during 1990, it was found that although European merger and acquisition regulators claim to be protecting competition and consumers, in fact, the more harm suffered by European rival firms when the acquire is coming from the outside the EU, the greater the likelihood of European regulatory intervention against the proposed merger or acquisition . The EC’s focus on competitors rather than consumers was revealed by this study.

To prevent substantial lessening and dominance of competition, the CCA prohibits mergers when that would have the effect, or be likely to have the effect. One of the main ways in which mergers can lessen competition in through unilateral effects. The unilateral effects which means the merged firms’ unilateral market power is increased and it leads to remove or weaken competition. In determining whether unilateral effects arise and whether they are to lessen the competition, the ACCC considers all of the merger functions under in s50

It is necessary for a firm to expand in order to gain profits or leverage in a market place. One of the ways firms can do this is by executing a merger. There are two types of mergers, horizontal and vertical mergers. There are many incentives for companies to perform either type of merger; however, both types of mergers will always raise suspicion when being executed because they are usually perceived as anticompetitive. In order to prevent an anticompetitive environment, our government established a federal agency called the Federal Trade Commission. Their job is to review the activity of any given firm and decide whether or not to allow them to continue. Presently, CVS and Etna are currently undergoing a vertical merger to gain profits and

This strategy started under the Reagan administration since they did not enforce U.S. anti-trust law “restricted managers ability to merge and consolidate monopolistic firms” (Schaeffer, 49). The Reagan administration viewed mergers and monopolies as a good thing. They argued that these mergers play important role in the economy and if there is ineffective management or redeployment of assets the companies can be penalize. Nevertheless, the government adopted policies in 1980, which allow more than 1,565 mergers that equal to be worth 32.9 billion and double value within a couple of years. During the next administration under George H. W. Bush they adopted similar policies and the chain toward Bill Clinton administration allowing mergers to continue plus arguing that the anti-trust laws were out dated. “There has been a sea-change in (federal government) attitudes towards large mergers” (Schaeffer,

While the FTC does pass most mergers that are brought forth, some deals do not go through. One of the deals that did not go through was when in 2013, SYSCO Corporation put in an offer to purchase rival U.S. Foods for what was to be worth around $8.2 Billion (F). If this deal would have went through, then the combined company would have created a powerhouse that would have made up 75 percent of the food distribution market in the United States (F). After over a year of trying to make the merger happen, a Washington U.S. District Judge put forth a preliminary injunction that stated the acquisition was being blocked over objections that said the larger company would hurt competition (G). This decision came after a lawsuit was filed by the FTC

Contents 1. 2. 3. 4. 5. 6. 7. Facts ............................................................................................................................. 3 Antitrust Law On Monopolization And Attempting To Monopolize .......................... 7 Economics Of

First this will extend the related literature on the topic of mergers, second requests and the use of event studies in detecting anticompetitive mergers. Second, by looking specifically at the changes in expected stock price of a company against the cumulative abnormal returns that they received, we can see the difference in which the issuance of a second request had upon the companies, which will enhance our knowledge of the subject. Third, by analyzing the effects of whether a company received a second request or complaint, and which year and transaction value was attached to the acquisition or merger we can determine patterns for the future which can assist policy makers in introducing new legislature on defining which companies require a second request and those that do not. By also including the use of CARs over an event window within our study, we can understand more thoroughly how and if the issuance of second requests and complaints effects a company’s stock price as we have

This should definitely be regulated by the government. A merger causes fewer options for the consumer and growth and production increase brings competition cost down and subsequently increases profit per unit for the firm. But with no competition, these new “monopolies” have the power to do as they please. By loosening anti-trust laws, these firms will be allowed to increase their prices and consumers would have no choice but to pay. “…in some industries the government have price controls to limit price increases. That enables firms to benefit from economies of scale, but consumers don’t face monopoly prices.” (Pettinger, 2012) Price is a good practice the country should

Pikula (1999) observes that in merging two or more entities, the management of the companies must adhere to the Sherman Anti-trust Act which was established in 1890. This act was specifically established to prevent mergers from creating monopolies and cartels with an aim to exploit the consumers through determining prevailing market prices. If the merger results in a monopoly, it won’t be approved by the government. Employee contractual agreements must be considered before, during and after mergers. For the merger to go on seamlessly there should be shareholder approval. Initial approval by shareholders for the companies to consolidate their operations helps prevent conflicts from shareholders after the merger. Lastly, regulatory approval should be considered. The management must register the newly formed company. In addition, managers from the merging parties must consider agreements and contracts that the parties are engaging in as these will be transferred to the new company upon the merger.

Question 1 Several factors have been proposed as providing a rationale for mergers. Among the more prominent ones are (1) tax considerations, (2) diversification, (3)

It is believed that at the root of any business strategic merger is to expand. This expansion could be in the form of a larger operations leveraging resources, enhanced opportunities or too simply unite with another business to reduce expenses. Ford and Volvo explored the option of teaming up in hop of lowering manufacturing cost.

Oligopolistic markets are also characterised by barriers to entry (Sloman, et al., 2013). One of the OFT’s main concerns noted in the second referral to the Competition Commission surrounded the restrictions in acquiring planning permission to open a new supermarket (OFT, 2006). For a supermarket to achieve planning permission, there is a requirement for it to have demonstrated a ‘need’ in the area for more shopping space. This can act as a barrier to entry (Seely, 2012). Indeed, the Competition Commission (2008) concluded that the planning regime “necessarily act[s] as a barrier to entry or expansion” (p. 175). As a remedy, the Commission suggested the implementation of a ‘competition test’ as well. Griffith & Harmgart (2012) create a Cournot

In May of 2016, The European Commission signed off on Anheuser- Busch InBev’s more than $100 billion merger with SABMiller after the companies agreed to sell SABMiller’s premium brands in Europe and some other European operations (Bray). The merging of SABMiller and AB Inbev create the worlds largest beer company accounting for approximately 30% of beer industry sales (Bray). Margrethe Vestager, the commissioner in charge of European competition policy defended the decision to allow the merger to go through by stating “Today’s decision will ensure that competition is not weakened in these markets and that E.U. consumers are not worse off….Europeans buy around 125 billion euros of beer every year, so even a relatively small price increase could cause considerable harm to consumers” (Bray).

One major objective of mergers is to be able to reduce or fully eliminate the weaknesses that may exit in

The General Electric (GE) and Honeywell International (HI) case illustrates the complexities of structuring mergers and acquisitions when the combined firms are capable of exerting market influence that threatens the competitive landscape. While General Electric's CEO, Jack Welch, characterized the deal as, "This is the cleanest deal you'll ever see," European anti-trust regulators were not so inclined to view the transaction as harmless to competition (Elliot, 2001).