Final answer:
The DOJ and FTC review mergers based on antitrust laws and decide between four outcomes: approval, approval with conditions, denial, or withdrawal. Conditions may require divestitures to preserve competition. This ensures that mergers do not lead to excessive market concentration and the reduction of consumer welfare.
Step-by-step explanation:
The four potential outcomes of a merger review by the Department of Justice (DOJ) or Federal Trade Commission (FTC) are:
- Approval without conditions
- Approval with conditions
- Denial
- Withdrawal
Mergers can often bring about operational efficiencies and consumer benefits, but they may also reduce competition, leading to negative effects such as higher prices or decreased innovation. The antitrust laws empower the DOJ and FTC to manage these outcomes. Should concerns arise, they may impose conditions on mergers, such as divestitures, to maintain competition, or they may prohibit a merger outright if it's seen to significantly hinder competition.
For instance, when Johnson & Johnson acquired Pfizer's consumer health division, they were required to sell off certain brands to preserve competitive markets. These conditions are meant to keep a fair balance and prevent the creation of monopolies or excessively concentrated markets.