3 ms·

But doesn't the FTC look at US companies? If a merger results in a monopoly locally, isn't that enough to warrant denying it?

by Cyph0n 11y ago

adventured 11y ago
The FTC and DOJ don't block mergers because it may result in a monopoly. They don't specifically judge things based on monopoly or market share, but rather based on whether it will likely or has resulted in consumer / market harm (and I would agree that a quasi-monopoly merger is far more often than not going to fall into that category in the eyes of the FTC or DOJ, but that's not the criteria they start from). Intel for example has / had a practical monopoly in processors for many years in PCs. The government was ok with it, based on various terms they agreed upon with Intel. The same is true of Microsoft, and countless other businesses (big and small) across the US. There of course used to be far stricter rules on local monopolies in media (radio, tv, newspapers, cable stations etc), but those have been heavily relaxed in the last 20 years.
rhino369 11y ago
Only if the market is inherently local or the combination with result in increased prices. Market sizes vary. For airlines they look at cities or even specific airports. it doesn't matter that there are a million different airlines, if your merger creates a quasi monopoly for flights into and out of some cities. That's why in airline deals, you often see one of the two sell off routes to third party competitors. But for chemicals and agriculture supplies--it's really an international marketplace. It doesn't really matter if they are the only US company as long as Chinese, Korean and German companies are active in selling in America. Though the DOJ will undoubtedly look at the deal hard. Make sure things like distribution chains, retail deals etc. don't create a monopolistic effect.
- hga 11y ago
  Production is also international. German chemicals giant BASF's first plant outside of Europe was built in Texas in 1958, and as of late they've found Texas very attractive because of our low natural gas prices, feedstock costs are very important when you're making chemicals by the 100s of thousands of metric tons. (Potential supply disruptions might also be an issue, seeing as how last time I checked Germany gets most of it's natural gas from Russia through pipelines going through Ukraine, and with the latter two being at war right now....)

But doesn't the FTC look at US companies? If a merger results in a monopoly locally, isn't that enough to warrant denying it?

by Cyph0n 11y ago

But doesn't the FTC look at US companies? If a merger results in a monopoly locally, isn't that enough to warrant denying it?

adventured 11y ago

The FTC and DOJ don't block mergers because it may result in a monopoly. They don't specifically judge things based on monopoly or market share, but rather based on whether it will likely or has resulted in consumer / market harm (and I would agree that a quasi-monopoly merger is far more often than not going to fall into that category in the eyes of the FTC or DOJ, but that's not the criteria they start from). Intel for example has / had a practical monopoly in processors for many years in PCs. The government was ok with it, based on various terms they agreed upon with Intel. The same is true of Microsoft, and countless other businesses (big and small) across the US. There of course used to be far stricter rules on local monopolies in media (radio, tv, newspapers, cable stations etc), but those have been heavily relaxed in the last 20 years.

rhino369 11y ago

Only if the market is inherently local or the combination with result in increased prices. Market sizes vary. For airlines they look at cities or even specific airports. it doesn't matter that there are a million different airlines, if your merger creates a quasi monopoly for flights into and out of some cities. That's why in airline deals, you often see one of the two sell off routes to third party competitors. But for chemicals and agriculture supplies--it's really an international marketplace. It doesn't really matter if they are the only US company as long as Chinese, Korean and German companies are active in selling in America. Though the DOJ will undoubtedly look at the deal hard. Make sure things like distribution chains, retail deals etc. don't create a monopolistic effect.

hga 11y ago
Production is also international. German chemicals giant BASF's first plant outside of Europe was built in Texas in 1958, and as of late they've found Texas very attractive because of our low natural gas prices, feedstock costs are very important when you're making chemicals by the 100s of thousands of metric tons. (Potential supply disruptions might also be an issue, seeing as how last time I checked Germany gets most of it's natural gas from Russia through pipelines going through Ukraine, and with the latter two being at war right now....)