3 ms·

How could the acquisition of one solvent company by another in the same field not reduce competition? The UK seems to have gotten some token divestiture out of

How could the acquisition of one solvent company by another in the same field not reduce competition? The UK seems to have gotten some token divestiture out of this in the name of not reducing competition too much in a particular area, but merging of competitors by its very nature reduces competition.

nine_k 3y ago
If there are 100 roughly comparable companies, a merger happens, and 99 remain, the competition decreased, but the landscape is still competitive. If there are 3 roughly comparable companies that control 90% of the market, the competition is already low; if two of them merged, very little competition would remain. A duopoly is not as bad as a monopoly, but is still pretty far from an "efficient market".
- thfuran 3y ago
  >If there are 100 roughly comparable companies, a merger happens, and 99 remain, the competition decreased, but the landscape is still competitive. But still less competitive than it was. So why allow a company like Microsoft to make the field less competitive when it could afford to compete instead of buying its competitors? I think a company even half as large or profitable as Microsoft should have to present a pretty damn compelling case before being allowed to make any acquisition at all let alone that of one of their competitors.
  - AlchemistCamp 3y ago
    You should “allow” MS to make acquisitions because it’s their money and they should be able to spent it however they choose, within the constraints of the law. Your desire to block acquisitions in general is a dangerous one. Doing so, basically kills venture capital markets, and then we get far fewer startups, less innovative disruption and more entrenched market leaders.
  - nine_k 3y ago
    What if a company goes out of business, and fewer remain? Should it be even allowed to close? :) Mergers are different because they create fewer giants in the place where more smaller companies used to be. In extreme cases, it may have seriously bad consequences for broader public, and this is a reason to prevent a merger, or even split a monopoly. But this should be a rather extraordinary event.
    - thfuran 3y ago
      Why isn't a company with a revenue roughly the same as the country of Belgium merging with a competitor a rather extraordinary event?
      - nine_k 3y ago
        It is, it happens infrequently, and always is subject to scrutiny. (Belgium, with all due respect, is not very large.)

nine_k 3y ago

If there are 100 roughly comparable companies, a merger happens, and 99 remain, the competition decreased, but the landscape is still competitive. If there are 3 roughly comparable companies that control 90% of the market, the competition is already low; if two of them merged, very little competition would remain. A duopoly is not as bad as a monopoly, but is still pretty far from an "efficient market".

thfuran 3y ago
>If there are 100 roughly comparable companies, a merger happens, and 99 remain, the competition decreased, but the landscape is still competitive. But still less competitive than it was. So why allow a company like Microsoft to make the field less competitive when it could afford to compete instead of buying its competitors? I think a company even half as large or profitable as Microsoft should have to present a pretty damn compelling case before being allowed to make any acquisition at all let alone that of one of their competitors.
- AlchemistCamp 3y ago
  You should “allow” MS to make acquisitions because it’s their money and they should be able to spent it however they choose, within the constraints of the law. Your desire to block acquisitions in general is a dangerous one. Doing so, basically kills venture capital markets, and then we get far fewer startups, less innovative disruption and more entrenched market leaders.
- nine_k 3y ago
  What if a company goes out of business, and fewer remain? Should it be even allowed to close? :) Mergers are different because they create fewer giants in the place where more smaller companies used to be. In extreme cases, it may have seriously bad consequences for broader public, and this is a reason to prevent a merger, or even split a monopoly. But this should be a rather extraordinary event.
  - thfuran 3y ago
    Why isn't a company with a revenue roughly the same as the country of Belgium merging with a competitor a rather extraordinary event?
    - nine_k 3y ago
      It is, it happens infrequently, and always is subject to scrutiny. (Belgium, with all due respect, is not very large.)