Final answer:
The Federal Trade Commission's decision on the Kinder Morgan / El Paso Corporation merger involved approving the merger with the condition that Kinder Morgan divest certain assets to maintain market competition. This reflects the FTC's role in balancing economies of scale with preventing market power concentration.
Step-by-step explanation:
When considering the balance between corporate size and a larger number of competitors in a marketplace, one has to evaluate the implications of market power, economies of scale, and consumer benefits. The case of the Kinder Morgan / El Paso Corporation merger is a prime example. The Federal Trade Commission (FTC) faced a dilemma in this merger: to determine whether the new conglomerate would offer cost savings to consumers or would instead create a strong oligopoly position within the natural gas marketplace, potentially stifling competition.
The FTC approved the merger on the condition that Kinder Morgan divest itself of the overlap area, which included the Kinder Morgan Interstate Gas Transmission, Trailblazer Pipeline Co. LLC, processing facilities in Wyoming, and a 50 percent interest in the Rockies Express Pipeline. These divestitures were acquired by Tallgrass. This decision reflects the FTC's role in preserving competition while acknowledging the potential benefits that can arise from economies of scale such as cost reductions.
Government intervention, like that of the FTC, is designed to ensure that a merger doesn't lead to excessive market power that could harm consumers. The FTC aims to strike a delicate balance between allowing companies to achieve cost efficiencies and preventing the formation of monopolies or oligopolies.