Question

Discuss as to why the US government through the Department of Justice blocks merger between some businesses. Some proposals to merge are approved but the process takes time. Give example of merger approved recently and also example of merger blocked recently. (explain briefly )

Answer 1

The Justice department has been entrusted with responsibilities to check out the such mergers and acquisitions that inhibit the competitiveness of market. The monopolizing the market would cause the fall in the consumers surplus and overall welfare of society is compromised.

The justice departement uses the H-Index to see if the merger is making the market more monopolized or not. The H-Index value less than 1700 is not considered as the monopolizing.

The recently, the T Mobile and Sprint Merger was approved by the Justice departement. It was not causing any harm to the competitiveness of market.

Further, Novelis merger with Aleris was rejected by the justice departement, as it was threat to the competition in the market.