The Antitrust Battle Ahead - Essay Example

Download file to see previous pages... It may so happen that the merged organizations gains at the expense of the consumer. This is where the government chips in, through its antitrust regulations.
The government reserves the right, and rightly so, to intervene and block any merger deal which it feels would reduce competition in the industry and thereby adversely affect the consumers, either by way of high prices or by way of low quality. In some cases, these mergers may lead to less innovation thus indirectly putting consumers at a loss.
Section 7 of the Clayton Act disallows mergers and acquisitions when such transactions may significantly lower competition, or may create a monopoly, or may lead to formation of cartels (Federal Trade Commission 2011). Simply put, the purpose of antitrust legislations is to enforce laws that promote competitive markets.
These laws thus ensure efficient allocation of resources in a free market and prevent market failures. The focal point of antitrust economics is competition (Scheffman 2002). It is competition that is at the heart of many important business decisions and to a large extent determines the firms pricing strategies and tactics.
The Federal Trade Commission’s Bureau of Competition, along with the Bureau of Economics is entrusted with the enforcement of such antitrust laws in the United States. The FTC and Department of Justice review scores of merger filings every year of which 95 percent have no competitive issues (Federal Trade Commission 2011).
The first category consists of merger proposals wherein the competitive concerns can be resolved by mutual consent of the parties concerned. The revised merger proposal, so arrived after negotiations, retains the beneficial aspects of the deal and discards the threat. The federal regulators negotiated a settlement in the proposed merger deal of Comcast and NBC Universal. As a part of the revised deal, Comcast agreed to give up ...Download file to see next pagesRead More