Explain the significance of these terms in merger analysis with regard to (b) possibilities for operating synergy
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Four economic classifications of mergers are (1) horizontal, (2) vertical, (3) conglomerate, and (4) congeneric. Explain the significance of these terms in merger analysis with regard to Four economic classifications of mergers are (1) horizontal, (2) vertical, (3) conglomerate, and (4) congeneric. Explain the significance of these terms in merger analysis with regard to |
Explanation
The government generally intervenes to protect industry competition arising from merger. The horizontal and vertical mergers lead to increased market share and decrease competition. This may lead to monopolies or oligopolies and hence affect the overall industry and price of the product. So the government needs to intervene in these mergers to protect the industry participants. But congeneric and conglomerate mergers lead to diversification and do not increase the same industry's market share. Hence the government intervention is less in this type of merger.
Verified Answer
The horizontal and vertical mergers are more prone to government intervention. The government intervention is less in the congeneric and conglomerate merger.
