Introduction Mergers and acquisitions (or combinations) refer to a situation where the ownership of two or more enterprises is joined together. A merger is said to occur when two or more companies combine to form a new company. In this, two or more companies may merge with an existing company or they may merge to form a new company. The assets and liabilities of the transferor company become the assets and liabilities of the transferee company after the merger. The purpose of a merger is usually to create a bigger entity, which accelerates growth and leads to economies of scale. However, a merger may lead to unwanted socio- economic implications that are often frowned upon. This was proved when the European commission on competition blocked the merger of GE and Honeywell, which would have been one of the largest industrial mergers in history. This merger however, was earlier cleared by the concerned US agency – the Department of Justice. This clearly shows each country has its own rules on competition. What one perceives as a threat may not be taken the same way by the other. India, which has now opened itself to global competition, now has its own competition law. This new law, which seems to be in line with the trend globally, replaces the Monopolies and Restrictive Trade …show more content…
In line with the Antitrust legislation being an integral part of the economic life in many countries, India‘s outgoing law, namely, the MRTP Act is regarded as the competition law of India, because it defines a restrictive trade practice to mean a trade practice, which has, or may have the effect of preventing, distorting or restricting competition in any manner. In India, the first step of the country towards modern Competition law as always mentioned above was establishment of high level
Before a series of antitrust acts and laws were instituted by the federal government, it was not illegal for businesses to use any means to eliminate competition in late nineteenth-century America. Production technology was now advanced to the point that supply would surpass product demand. As competition in any given market increased, more and more companies joined together in either trusts or holding companies to bring market dominance under their control (Cengage 2). As President Theodore Roosevelt was sworn into office in 1901, he led America into action with forceful government solutions (“Online” 1). Roosevelt effectively regulated offending business giants by the formation of the Department of Commerce and Labor, the Bureau of Corporations, and antitrust lawsuits.
...efits from adopting unfair business practices and discouraging competition are much higher than the expected penalty and punishment. With changing time, there is need to make these laws more effective and relevant.
The anti-trust laws were set in place to promote vigorous competition but also to protect the consumer from unfair mergers and business practices. The first antitrust law that was passed by Congress is called the Sherman Act and is a “comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade” according to www.FTC.gov . Later in 1914 Congress passed two more laws, one creating the Federal Trade Commission Act (FTCA) and then the Clayton Act, which now create the three core federal antitrust laws that are still active currently. Although they have changed over the last hundred years, they still have the same concept: “to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up” as stated by the FTC.gov website on The Antitrust Laws.
A merger is a partial or total combination of two separate business firms and forming of a new one. There are predominantly two kinds of mergers: partial and complete. Partial merger usually involves the combination of joint ventures and inter-corporate stock purchases. Complete mergers are results in blending of identities and the creation of a single succeeding firm. (Hicks, 2012, p 491). Mergers in the healthcare sector, particularly horizontal hospital mergers wherein two or more hospitals merge into a single corporation, are increasing both in frequency and importance. (Gaughan, 2002). This paper is an attempt to study the impact of the merger of two competing healthcare organization and will also attempt to propose appropriate clinical and managerial interventions.
It is proper to present a business definition of merger as it found on legal reference with the ultimate goal in the pursuing of an explanation on which this paper intents to present. A merger in accordance with the textbook is legally defined as a contractual and statuary process in which the (surviving corporation) acquires all the assets and liabilities of another corporation (the merged corporation). The definition go even farther to involve and clarify about what happen to shares by explaining the following; “the shareholders of the merged corporation either are paid for their share or receive the shares of the surviving corporation”. But in simple terms is my attempt to define as the product or birth of a corporation on which typically extends its operation by combining with another corporation. So from two on existence corporations in the process it gets absorbed into becomes one entity. The legal definition also implied more than meet the eye. The terms contractual and statuary, it implied a process on which contracts and statuary measures emerge as measures to regulate, standardized, governing or simply at times may complicate whole process. These terms provide an explicit umbrella and it becomes as part of the agreement formulating or promoting a case for contracts to be precedent, enforced or regulated in a now or in the future under a court of law under the Contract Business Law Statue of Practice. As for what happens to the shares of the involved corporations no more explanation is needed as the already actions mentioned clearly stated of the expectations of a merge’s share involvement.
In this industry, companies need to provide a national network, meaning that there are significant economies of scale to be made with a merger. For example, when T-Mobile and Orange decided to merge, their ambition was to combine both networks, eliminate duplication and create a single super-network. Furthermore, they said it would provide the customers with a bigger network and better coverage .
The word “merger” is very common term that everyone in America has to deal with in some aspect of life. Banks, oil companies, car manufacturers, computer makers…the list goes on for ever, and the mergers of these companies have a direct effect on our daily life. For decades the US government and the court systems have tried to regulate how mergers can and cannot happen and why. The reason(s) as to why a merger is allowed or not has varied over the years, but one major concept has remained the same: too many mergers within a particular market can reduce competition and create a monopoly (or a near monopoly condition). Merging firms often state that a merger could help them reduce costs and to develop better products. They claim this would clearly be a benefit to the consumers of their product(s).
One of the main features of UK Competition Policy is that it tries to stop firms from abusing their dominant market position. Some firms become very successful and powerful within the industry that they are operating in. "European firms suspected of gaining monopoly power through creating barriers to entry, colluding over prices, or through merger activity, can be investigated under European Union law," (Lees and Lam, 2001) A dominant market position usually occurs for one of two reasons; either the firm is performing well and a natural monopoly occurs, or, the firm is behaving in an un-just manner. UK Competition Policy exists to eliminate the abuse of the position, not the fact that they are in this position, i.e. it is concerned with the second of these reasons. This is different to in the USA, where firms are "prohibited from monopolising or attempting to monopolise a market, and the growth of a dominant position is restrained at an early stage," (Lees and Lam, 2001.)
The main modifications of the EU competition law came from regulation 1/2003, which has also been named as the ‘Modernization Package’ . This was the first ever legislation to regulate application of EU competition law in order to restructure previous regulation that has been argued ineffective in balancing administration and supervision.
Companies merge and acquire other companies for a lot of strategic reasons with different degrees of success. The success of a merger is measured by whether the value of the acquiring firm is enhanced by it. The impact of mergers and acquisitions on an organization can be small and big in other cases. Mergers and acquisitions immediately impact organizations with changes in rights, and ideas and eventually, in practice. There are multiple reasons, some are motives and financial forces just to name a few.
According to Florida Incorporation, a merger is the statutory combination of two or more corporations in which one of the corporations survives and the other corporations cease to exist. An acquisition is obtaining control of another corporation by purchasing all or a majority of its outstanding shares, or by purchasing its assets (Florida Incorporation, 2006).
...ur; in such cases, competition authorities must act to fight unlawful practices that are detrimental for the economic welfare.
A merger or acquisition is a mix of two organizations where one partnership is totally consumed by another enterprise. The less essential organization loses its personality and turns out to be a piece of the more imperative partnership, which holds its character. A merger quenches the consolidated company, and the surviving partnership accepts all the rights, benefits, and liabilities of the combined enterprise. A merger is not the same as a solidification, in which two partnerships lose their different personalities and join to frame a totally new company. Government and state laws control mergers and acquisitions. Direction depends on the worry that mergers unavoidably dispose
The entity that has to face various problems in the market and does not have the ability to overcome difficulties has to go for acquisition. In case when the strong market presence buys the weak firm then cost efficient and competitive company is generated. This takes the company out of their tough time successfully.
Mergers mean two or more companies combining together to form one business or firm. There are six different types of mergers: Horizontal, Vertical, Conglomerate, Market extension, Product Extension and Diversified activity.