Word: merger
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Dates: during 1980-1989
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Will this merger tend to create a monopoly or will it further competition? That simple question can often lead to a bewilderingly complex discussion among economists and antitrust lawyers about what exactly constitutes a market. Whether the product in question is shoes or steel, it is first necessary to size up the market before deciding whether or not a merger or acquisition endangers competition...
Last week the Justice Department took an important step toward clearing up the confusion. In the first major revision of antitrust guidelines since 1968, Attorney General William French Smith released a 44-page document designed to help businessmen determine whether a merger or takeover effort is likely to be challenged by the Government...
...only to have Washington veto it as anticompetitive. Last year Mobil Corp. announced plans to spend an estimated $6.5 billion in what eventually turned out to be a futile struggle to acquire Marathon Oil Co. The takeover was blocked in federal court because it was decided that such a merger would have an adverse effect on competition in gasoline retailing in the Midwest...
...biggest single change in the new guidelines deals with the way markets are to be measured and how the concentration of a market is judged. Says Lawrence J. White, director of the economic policy office of the Justice Department: "Our concern here is with mergers that would tend to have an anticompetitive effect. If the effect is not significant, the merger would not fall within the boundaries of our interest...
...easy. The formula is applied by adding together the sum of the mathematical squares of every company's market share in a particular industry or business. For example, if five companies each have 20% of a market, the Herfindahl index for that market would be 2,000. A merger of two of those companies, though, would automatically push the index to 2,800, and the 800-point increase would almost certainly provoke a challenge under the new guidelines. By contrast, the index for a market in which 20 companies each have 5% of the business would total...