Major operations of M&A's involving global companies are taking place. It is natural that arise concerns about possible undesirable byproducts, such as future price increases of products sold by entities resulting from these M&A's. Regulatory competition agencies are charged to decide in short time. Faced with this overview, these control agencies could count on new and more efficient rules to prevent abuse detrimental to competition? Which would be these rules?
Hi Roberto,
May I suggest that you explore the Herfindahl–Hirschman Index (HHI)? Basically, the HHI involves the market share of each firm competing in a market and then finding the sum of these squares for all of the firms in a specific market. The maximum is 10,000 in a monopolized market. Ideally, the market share is measured in money rather than sales.
If you want to see how it might be used, then look at the link to see how the Antitrust Division of the United State Department of Justice applies its guidelines. Explore both links to understand this better.
Often mergers or acquisitions reduce competition; however, it is a bit more complex that it might seem. This depends to some extent on the dominance of the firm(s) with the most market power.
Other measures exist. For example, four-firm concentration ratios are common and other numbers have been used. Other measures exist, of course.
I hope this helps as a good start.
Rob
https://www.justice.gov/atr/herfindahl-hirschman-index
https://www.justice.gov/atr/horizontal-merger-guidelines-08192010#5c
Hi Rob,
It's a great idea. I'll check with my team, to see talent that dominate statistical tools.
Yes, large mergers and acquisitions can reduce competition. Therefore, antimonopoly offices should function efficiently and their task is to limit the scale of mergers and acquisitions of companies reducing the level of competition on specific markets. The scale of the consolidation process of economic entities operating in specific sectors and sectors of the economy depends on the level of efficiency, impartiality and reliability of antimonopoly offices' operation.
Best regards,
Dariusz Prokopowicz
Hi, Dariusz Prokopowicz
I agree that regulation from the State is needed to maintain competition considering M&A's.
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