1discuss acquisitions and mergers competition how it is stif

1.discuss acquisitions and mergers, competition (how it is stifled and/promoted).

2. Look at wireless coverage maps.

3. Consider new services (streaming video, audio, TV etc.).

Solution

Mergers: Merger means the combination of two or more companies in creation of a new entity.
Benefits of merger:
a) Reduction of financial risk
b) larger market share
c) Diversification of product and service offerings
example: Indian company tech mahindra and satyam combined to form mahindra satyam
Problem in case of merger or its fall:
a) Lack of human integration
b) Mismanagement of cultural issues
c) lack of communication
example: Daimler and Chrysler merger
Acquisition: When one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition.
• Acquisition is generally considered negative in nature
effects of acquistion:
a) staff reductions
b) acquiring new technologies
c)Taxation
d) industry visibility
examples: Microsoft + skype, google + motorola , tata motors and jaguar etc.

Broad purpose of any M&A deal is:

· Growth from acquiring new products, markets and customers

· Increased profitability based on strategic potential of the deal

Failure of any M&A deal:

Losing the focus on the desired objectives, failure to devise a concrete plan with suitable involvement and control,

and lack of establishing necessary integration processes.

EFFECTS OF M&A ON COMPETITION

As regards to competition, it is highly likely that M&A may lead to lesser competition in the market. For understanding the impact of M&A on competition, it is important to understand the relation between concentration and competition in a market
The bigger the merger or acquisition, the greater monopoly would the existing or new entity, as the case may be, is likely to have upon the market competition. This is because a merger or an acquisition takes over the business of the merged or acquired entity too and as such acquires the customers simultaneously. Yes, M&A have different impact as far as market competitions are concerned but this does not sideline the fact that a greater market share employs greater concentration. The most common impacts of M&A on competition are enumerated in two broad categories:
1. Unilateral Effects: Unilateral effects occurs when the merged enterprise/group is able to gain considerable market power sufficient enough for it to act independent of market forces and profitably reduce value for money, choice for innovation through its own acts without the need for a co-operative response from competitors.
2. Coordinated Effects: Coordinated effects transpire from a collusive behavior.A merger in a concentrated market makes coordination effect easier because it may significantly hamper effective competition, through creation or strengthening of a collective dominant position, because it increases the likelihood of organizations able to coordinate their behavior and raise prices even without entering into an agreement

But there are certain competition policy in every control to ensure Market liberalisation, State aid control and Merger control.