Guide to Antitrust Laws Competitive Effects The law bars mergers when the effect "may be substantially to lessen competition or to tend to create a monopoly. Horizontal Mergers There are two ways that a merger between competitors can lessen competition and harm consumers:
Share on Facebook A merger might present a wide variety of cost-containment, product line and economies of scale benefits for two businesses, but whether the union is a good idea also comes down to how the public accepts it.
Before you consider combining two companies, review the effects the merger will have on your customers and how likely they will be to stay with you based on what the merger means to them.
Brand Impact If a marketplace has three or more competitors, with perceived value and brand image important to consumers, a merger that results in the absorption of one company can send consumers to a competitor. The company name you keep might have been the third choice of many customers of the brand you shut down, causing them to begin shopping at their former second choice, a remaining competitor.
Customer Service Changes When you merge two companies, warranties, guarantees and other customer service issues can affect your customers. If customers shopped at one business because of the proximity of its stores, they might move to your competitor if you close stores near them and require them to travel farther for service issues.
If you lay off redundant customer service reps and salespeople, your customers might not feel the personal connection to your business they once did. Less Choice Some mergers result in both brands continuing to operate, sharing back office functions such as marketing, accounting and human resources.
When mergers result in one brand ending or one set of products leaving the marketplace, consumers have fewer options. This may not be a problem with particular products or services consumers need, such as oil changes or landscaping services, but it might make them more willing to look at a larger shopping area to find more options.
Post-merger price decreases benefit consumers but make it more difficult for competitors to stay in business or for new businesses to enter the market.
Increased or Decreased Prices Less competition means more of an opportunity for you to raise your prices. If customers are willing to expand their geographic shopping area because of fewer choices, their willingness to travel becomes more likely if less competition leads to higher prices.
If the only two providers in a marketplace merge, the temptation to raise prices makes it easier for a competitor to enter the market. If a merger results in reduced operating expenses, the new business can increase gross profits by lowering prices and increasing sales volumes.“This merger, combined with the repeal of net neutrality protections earlier this week, is a big loss for consumers.” Under the terms of the merger agreement, the deal needs to close by June The article by Dafny and Lee was about mergers among hospitals and other health care providers, but Dafny said the same principles can apply to mergers of insurers.
In a way, more is at stake.
Brand Impact. If a marketplace has three or more competitors, with perceived value and brand image important to consumers, a merger that results in the absorption of one company can send consumers to .
During mergers and acquisitions it is important for managers and HR professionals to be alert to signs of negative competition and to ensure that employees are being kept informed about impacts on. The law bars mergers when the effect "may be substantially to lessen competition or to tend to create a monopoly." Three basic kinds of mergers may have this effect: horizontal mergers, which involve two competitors; vertical mergers, which involve firms in a buyer-seller relationship; and potential.
Mar 10, · Most mergers and acquisitions help make our economy more efficient, but a small minority weaken competition and harm consumers. On a small scale, when an entrepreneur with a successful local.