What are horizontal, vertical, and conglomerate mergers? Why have antitrust laws been passed? Are these laws...

What are horizontal, vertical, and conglomerate mergers?

Why have antitrust laws been passed? Are these laws performing their function?

Expert Solution

What are horizontal, vertical, and conglomerate mergers?

When two companies share power under common ownership, we claim the two companies have joined together. There are three main forms of fusions. A merger refers to an arrangement where two companies come together to form a single entity. To put it another way, a merger is the merging of two entities into one legal entity.

Horizontal Merger is a fusion between companies that sell related goods in the same market. The 1980s bank mergers and the HP and Compaq mergers are examples of horizontal mergers. A horizontal merger shrinks market competition. A horizontal merger is a merger of businesses that compete directly with each other. Horizontal fusions are achieved to increase market strength (market share), further maximize economies of scale and leverage synergies of merger.

Vertical Merger is a merger of firms in the same industry but at various stages of the process. In other words, there is a vertical merger between businesses where one buys or sells something from or to another. Pepsi's merger with the supermarket chains that he provides with drinks, for example, is a vertical merger. An example is e-Bay purchasing PayPal.

Conglomerate Merger is a merger of firms from various sectors. One example of this is the merger of Phillip Morris and Miller Brewing.

Why have antitrust laws been passed? Are these laws performing their function?

Antitrust laws have been in the US in the past in order to promote competition in the economy and control any monopolistic or market concentration activities by any firm in the market.

For eg. The Sherman Act and other acts have been passed from time to time to prohibit firms from engaging in any informal agreement to control prices in the market.

Yes, these laws are revised from time to time to suit market trends and have been doing a good job in controlling market power and anti competitive practices in the economy.

keosha answered 4 months ago

Four economic classifications of mergers are (1) horizontal, (2) vertical, (3) conglomerate, and (4) congeneric. Explain...

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 (a) the likelihood of governmental intervention and (b) possibilities for operating synergy. Use a practical example for illustrative purposes.

Four classifications of corporate mergers are (1) horizontal, (2) vertical, (3) conglomerate and (4) congeneric. Explain...

Four classifications of corporate mergers are (1) horizontal, (2) vertical, (3) conglomerate and (4) congeneric. Explain its meaning in the context of a merger analysis in relation to the (a) probability of a government intervention (b) probability of operating synergistically

what are the current laws that have been passed in regard of poverty

Determine whether the following transactions involve spot exchange, contracts, vertical integration, conglomerate mergers, horizontal integration, site...

Determine whether the following transactions involve spot exchange, contracts, vertical integration, conglomerate mergers, horizontal integration, site specificity, physical-asset specificity, dedicated assets or human capital. Bob, the owner of a bakery, buys his competition. Bob, the owner of a bakery, hired a pastry chef who is famous for her cakes. Bob, the owner of a bakery, buys a wheat farm so he can mill his own wheat flour. Bob, the owner of a bakery, has ovens that are used only to...

Business la chapter 48 1. Was this a horizontal merger, a vertical merger, or a conglomerate...

Business la chapter 48 1. Was this a horizontal merger, a vertical merger, or a conglomerate merger? 2. How is the market defined, in terms of both product or service and geographic area?

Find some companies with the following strategies: Backward vertical integration, Forward vertical integration, Horizontal integration, Conglomerate...

Find some companies with the following strategies: Backward vertical integration, Forward vertical integration, Horizontal integration, Conglomerate merger

Which scope (horizontal or vertical) of mergers and acquisitions do you think is the most challenging?...

Which scope (horizontal or vertical) of mergers and acquisitions do you think is the most challenging? Please support your answer by factual evidence, showing at least two convincing arguments in support of the author’s explanation of why one type of merger is more challenging than another?

Prepare a paragraph to tell us what is horizontal and vertical analysis. State why vertical and...

Prepare a paragraph to tell us what is horizontal and vertical analysis. State why vertical and horizontal analysis can be of value to any company. How it might apply to your employer/business or other business you know of?

Many laws have been passed to try to help control the high costs of healthcare services...

Many laws have been passed to try to help control the high costs of healthcare services and liability insurance in the US. Besides cost, what other effects do these laws have on healthcare delivery? What is the individual's responsibility (patient or provider)?

List 3 antitrust Laws and describe what each does

Question