Question

Why would the FTC and the Justice Department be concerned about the merger of two strong companies in a marke

with few competitors? What advantages could the newly-formed company have?

Answer 1

This my answer that got me a 100%:

The FTC and the Justice Department would be concerned about the merger of two strong companies in a market with a few competitors because in about 5% of cases, the merger may significantly reduce competition. The newly-formed company could become bigger and stronger than either was when they were alone.

Answer 2

The FTC and the Justice Department would be concerned about an oligopolistic firm, or even monopoly forming.

Step-by-step explanation:

A monopoly is a firm that becomes the only seller in a particular market, while an oligopolistic firm is one that is part of an oligopoly: a market that only has a few sellers.

Monopolies have a lot of market power: they can set prices higher than needed, or higher than they would be if there was competition. These higher prices affects consumers, and because the monopoly is the only seller, the consumers cannot turn to other firms.

An oligopolistic firm also has market power, not as much as the monopoly, but they still can make alliances with the other firms that are part of the oligopoly in order to set prices that are higher than necessary.

For this reason, the FTC and the Justice Deparment are concerned about corporate mergers, and they can stop any of these mergers if it results in the creation of a monopoly.