Question

1. Distinguish a merger from an acquisition, and state the conditions under which both raise regulatory concern.
2. Characterize as precisely as possible two indexes the Department of Justice’s antitrust division uses to approve mergers and acquisitions.
3. What levels of each would trigger scrutiny from the U.S. Federal Trade Commission?

d. What are the new directions for assessing the argument for approving mergers and acquisitions?

Answer 1

a. A merger is when two different enterprises come up together and function as one, while an acquisition is when an enterprise completely takes over another company.

The conditions for regulatory concern with both merger and acquisition is that it eliminates competition. When competition is eliminated it creates hassle in the market as the firms will produce less output now and increase the prices. It will result in a monopoly and make the consumers worse off.