Question

1 2 3 4 5 6 7 8 9 10 Why would the FTC and the Justice Department be concerned about the merger of two strong companies in a market with few competitors? What advantages could the newly-formed company have?

Answer 1

SAMPLE RESPONSE:

The FTC and the Justice Department would be concerned about the merger of two strong companies in a market with few competitors because the resulting company could end up with monopoly power in the market. The newly-formed company could have such a large market share or so much money or many employees that the other companies in the market would be unable to compete.

Answer 2

The Federal Trade Comission and the Justice Department would be concerned in case the merger of the two competitors led to the development of a monopolist.

The anti-trust law in the United States forbids the creation of private monopolies. This law is encoded in the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Comission Act of 1914.

For example, in 1911, the Standard Oil Company was broken up because it was a monopoly. The companies that came from that decision are: Exxon, Mobil, and Chevron.