How Antitrust Acts Control Mergers

Mergers, consolidation, and acquisition lead to the creation of a bigger and more powerful business. These businesses have even greater control of the field in which they operate. The antitrust laws are meant to protect any unlawful business practices which lead to general exploitation of the consumers due to the harmful effects of having businesses that are large in size. Antitrust laws are implemented depending on the type of merger and the projected effects of such a merger.

There are three distinct types of mergers. First, there is a merger of a company with another company, which offers the same products in the same locality (horizontal mergers). If this merger is deemed to lead to reduced competition or unfair business practice, the antitrust laws may be used to protect the mergers from occurring regardless of whether the merger involves two big companies or two small companies. The antitrust laws can also be applied to vertical mergers – these are mergers between either the company and the main customer or supplier. This type of merger may be detrimental to business practice since the business with control of either the customer or the supplier may have an unfair advantage over the other businesses. The supplier may give the products to the other companies at a higher price which may affect the effective competition in the field where the companies operate.

Therefore, antitrust laws may be used to prevent mergers if unfair competition is likely to occur due to such a merger. The merger may also be in the form of a conglomerate where a business acquires another in a different field of production. Antitrust laws may be used to prevent such a merger if it leads to unfair competition, either due to the business having a much bigger financial strength or using it to cause unfair competition in the market.