MERGER AND ACQUISITIONS POLICY: INDUSTRIAL CONCENTRATION AND DEMAND ELASTICTY APPROACH

Corporations often engage in acquisition of other corporations or businesses. Merger occurs when one corporation is absorbed into another corporation and ceases to exist. In horizontal merger, one firm acquires another firm that produces and sells an identical or similar product in the same geographic area, and thereby eliminates competition between the two firms. In a vertical merger, one firm acquires either a customer or supplier. Conglomerates merger encompass all other acquisitions, including pure conglomerate transactions where the merger party have no evident economic relationship. Each form of merger raises distinctive competitive concerns and need a sound and prudent public policy as a basis for regulation.