There Are Strict Guidelines To Merging Companies; In Fact,

Monopolies and oligopolies often use anti-competitive practices, which can have a negative impact on the economy. This is why company mergers are often examined closely by government regulators to avoid reducing competition in an industry.

A relevant market is defined as a market where “sellers, if unified by a hypothetical cartel or merger, could raise prices significantly above the competitive level”. The main focus here is not whether other office retailers have anything in common with office superstores, but whether a sufficient number of customers will continue buying from them despite of significant price increases. The relevant market in the case includes only Office Depot, Staples, and Office Max in some areas. The proposed merger will most likely create a monopoly and significantly reduce competition. The evidence shows that even if the new monopolist raises the prices by more than 5%, the majority of customers will not consider such retailers as Wal-Mart, BestBuy, Target, Kmart as substitutes for

Omnicare, Inc., (NYSE: OCR) and CVS Health Corporation (NYSE: CVS), are two competitive firms in different industries. A press release announces that “CVS Health and Omnicare sign a definitive agreement for CVS Health to acquire Omnicare” ("CVS Health and Omnicare Sign a Definitive Agreement for CVS Health to Acquire Omnicare," 2015). The purpose of this paper is to discuss the merger of CVS and Omnicare. First, the paper describes the principal firms in the merger and the industry in which each operates. Secondly, the paper discusses the incentives to consolidate from the viewpoints of each firm. Thirdly, the writer explains the competitive environment in the industry and how it benefits the firms and society.

6. In an era of global competition, what is the case for antitrust authorities to permit the formation of large domestic firms through mergers and acquisitions?

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

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

The Federal Trade Commission has taken the first step toward blocking the proposed $6.3 billion merger of Staples and Office Depot, saying the deal would hurt competition in the market for office supplies sold to large corporations. They made the complaint that the merge violated antitrust laws. "The Commission has reason to believe that the proposed merger between Staples and Office Depot is likely to eliminate beneficial competition that large companies rely on to reduce the costs of office supplies," said FTC Chairwoman Edith Ramirez. The FTC has blocked the merge of these companies since 1997. The companies have released a joint statement saying that they think the FTC vision of the market is "based on a flawed analysis and misunderstanding

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

Office Depot and Staples, had worked so hard on making mutual agreements and knew that the FTC wouldn't hold back on any "evidence" that they found and it would be used in a negative way. Office Depot and Staples wouldn't have their reputation put at risk, and had fought hard for the injustice. Both Office Depot and Staples had stated: "The FTC unfairly uses a narrow definition of our "product" as well as who our competitors are. Staples and Office Depot together sell only 5.5% percent of office-supply products in the nation. Merging the two firms would not substantially increase concentration or lessen competition." (Market Structures paper, page

Kroger has merged with several companies expanding its range across the United States. They have merged with companies such as Dillon Companies Inc, Fred Meyer Inc, and Harris Teeter. The merger in 1999 with Fred Meyer was huge for Kroger simply because Kroger became the market with the largest geographic span.

When companies combine/merge the whole objective is to gain new opportunities, gain market share, grow the business, to become more innovative and to improve product offerings, utilizing/sharing the existing resources and data. From the case

When it comes to the impact of the Five Forces of Competition and its effect on the performance of Staples and Office Depot, there does not appear to be a strong threat of new entrants in the big-box retail office supply segment of the industry. It seems unlikely that anyone will want to open a new office supply store. While there is a level of service differentiation between the two companies, there is little product differentiation between the two. Likewise, there would be little product differentiation from a new competitor. The threat of substitutes comes into play between Staples and Office Depot in that both companies offer basically the same products. If the customer can’t get what he wants at one store, he can go to the other. Likewise, if the customer becomes disenfranchised with one company for whatever reason, he can easily go to the other company. There doesn’t seem to be much bargaining power of customers or suppliers. There does seems to be a strong industry rivalry which, as with most industries, is the major determinant of the competitiveness of the industry.

However, if the merger is approved, Florida and Palm Beach County economic officials will fight to keep the headquarters in Boca Raton (Pounds, M.H., 2015). If the transaction is dealt, customers would have no other alternatives as the merger would create a monopoly which eventually would not benefit customers. Furthermore, if both companies were to merge, bigger national customers who buy on a contract basis would have no other alternative. American Antitrust Institute is not the only organization to voice out their concern about the impeding acquisition. The American Postal Workers Union asked regulators from antitrust to nix the deal as it protest stores, saying there is no doubt a monopoly would be created by joining the number one and two office supply retailers in the United States (Pounds, M.H., 2015). Recently, the falling of Staples and Office Depot’s stock on a new report that the office supply retailers’ mergers bid may be rejected by the Federal Trade Commission. This proposed acquisition of Boca Raton-based Office Depot is not favoured by FTC Bureau of Competition Head Deborah Feinstein. Staples’ was trading at US$12.43, fell 5.83% to US$ 12.75 while Office Depot’s stock fell 4.08% to

The merger between US Airways and American Airlines could easily be considered an Oligopoly. With few large carriers within the industry, these larger corporations will have the power to influence the global market. The Justice Department and Federal Trade Commission attempted to block this merger at first but that was met with some great resistance. Since both of there governing bodies had allowed mergers by Delta, United, and Southwest, it was nearly impossible for them to block this one.

FTC claimed that based on various analysis and evidence, proposed merger between Staples and Office Depot will harm competition in office superstore chain market and raise market price which will lessen customers’ welfare. Nevertheless, two parties of merger casted doubt on every detailed statement, and interpreted that this merger will reduce costs, broaden scale of economies, improve economic efficiency, and optimize resource allocation, and then lower market price efficiently. Finally, the Court chose to agree with FTC’s contention.