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.