Which Two Factors Make Regulating Mergers Complicated

question 99

Multiple Choice

Which two factors make regulating mergers complicated?

• A) First, firms may lobby government officials to influence their decision to approve the merger. Second, by the time the government officials reach a decision regarding the merger, the firms often decide not to merge.
• B) First, the time it takes to reach a decision to approve a merger is so long that the firms often have new owners and mangers. Second, by law, government officials are not allowed to consider the impact of foreign trade (exports and imports) on the degree of competition in the markets of the merged firms.
• C) First, the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice must both approve mergers. Second, the concentration ratios that are used to evaluate the degree of competition the merged firms face are flawed.
• D) First, it is not always clear what market firms are in. Second, the newly merged firm might be more efficient than the merging firms were individually.

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Definitions:

Market Development

Strategies or actions that seek to expand an existing product into new markets or demographic segments.

Product Development

Product development involves the creation and design of new products or the improvement of existing ones, aiming to meet market demand and enhance competitive advantage.

Diversification

The process of allocating investments among different financial assets or sectors to reduce risk in a portfolio.

SBU

Strategic Business Unit, a fully-functional unit of a business that has its own vision and direction, often with responsibility for its own profitability.