Question

Why does the government carefully monitor horizontal mergers?

Answer 1

The multiple choices are as follows:

a. It's possible for control to shift to a foreign-owned corporation.

b. The resulting single firm might gain monopoly power in its market.

c. Employee layoffs usually result.

d. The new firm may discontinue some of the original firms' products.

The correct answer is B,the resulting single firm might gain monopoly power in its market.

Step-by-step explanation:

Horizontal merger is the combination of businesses operating at the same level of the supply chain, for instance a downstream oil company merging with another downstream oil company.

Examples of such transactions are abound in the social media industry lately where a bigger firm tries as much as possible to acquire a smaller paying so much in one single merger or acquisition deal.

Answer 2

The government carefully monitors horizontal mergers because the resulting single firm might gain monopoly power in its market, and the government doesn't want it to become a monopoly.