RE453 Exam#2

Clayton Act (1914)

"To arrest the creation of trusts in their incipiency and before consummation..."

Section 7, Clayton Act

"Where in any line of business, in any section of the country, the effect of such acquisition may be substantially to lessen competition or tend to create a monopoly"

1976 Hart-Scott-Rodino Act

Pre-Merger Notification: FTC & DOJ must be notified 30 days in advance of any merger where: Acquiring party has sales > $100 million Acquired party has sales > $10 million

Horizontal Merger

between companies in the same industry. Horizontal merger is a business consolidation that occurs between firms who operate in the same space, often as competitors offering the same good or service.

Conglomerate Merger

between firms that are involved in totally unrelated business activities. There are two types of conglomerate mergers: pure and mixed. Pure conglomerate mergers involve firms with nothing in common, while mixed conglomerate mergers involve firms that are looking for product extensions or market extensions

INCIPIENCY

is important: get at concentration in early stages of development (don't wait until monopoly)

Product extension

merger between firms producing different but related products - Example: Coke buys Gatorade

BEFORE CONSUMMATION

mergers can be challenged before they take place; injunction keeps businesses separate pending court review

Market extension

similar product, different region - Example: Safeway & Stop and Shop

Vertical Merger

two companies producing different goods or services for one specific finished product. A vertical merger occurs when two or more firms, operating at different levels within an industry's supply chain, merge operations.