Summary of - The Antitrust Battle Ahead by Protess and De la Merced - Article Example

 The article ‘The Antitrust Battle Ahead’ by Ben Protess and Michael J. De la Merced brings to focus on important economic aspects that may arise from mergers and acquisitions. The article also highlights the various forms in which regulators may intervene to block mergers that are potentially harmful to the customer.Companies may resort to mergers and acquisitions because they provide an inorganic route to expansion. Any such transaction makes good strategic sense for at least one of the companies involved in the deal.

However, there is nothing to say that whatever is good for the organization is also good for its consumers. It may so happen that the merged organizations gains at the expense of the consumer. This is where the government chips in, through its antitrust regulations.The government reserves the right, and rightly so, to intervene and block any merger deal which it feels would reduce competition in the industry and thereby adversely affect the consumers, either by way of high prices or by way of low quality.

In some cases, these mergers may lead to less innovation thus indirectly putting consumers at a loss. Simply put, the purpose of antitrust legislation is to enforce laws that promote competitive markets. These laws thus ensure efficient allocation of resources in a free market and prevent market failures. The focal point of antitrust economics is competition (Scheffman 2002). It is the competition that is at the heart of many important business decisions and to a large extent determines the firms pricing strategies and tactics.

The rest, which does have antitrust issues, may broadly be classified into two categories. The first category consists of merger proposals wherein the competitive concerns can be resolved by mutual consent of the parties concerned. The revised merger proposal so arrived after negotiations, retains the beneficial aspects of the deal and discards the threat. The federal regulators negotiated a settlement in the proposed merger deal of Comcast and NBC Universal. As a part of the revised deal, Comcast agreed to give up NBC’s management role in Hulu, the Internet video site and managed to secure the government’s permission to go ahead with the merger.

Likewise, the negotiations in case of the Nasdaq’s proposed $11 billion bid for rival NYSE Euronext may not have been amicable, however, the bid was revoked at the intervention and threat of the Department of Justice to sue the merging companies. The second category of proposals consists of cases where consensus cannot be reached between the regulators and merging parties. In such instances, the regulators move to the federal court to prevent the merger. The Justice Department recently moved to court in a bid to block AT&T’s takeover of T-Mobile USA.

Had this merger seen the light of the day, it would have created the nation’s largest mobile carrier. Apprehensions were rife that this would be against consumer welfare given the sheer size of the market share of the combined entity (Priest 2011). Thus the regulators played a vital role in ensuring that the consumer’s interests are not harmed. The blockage of this merger also establishes that the law is forward-looking and bars mergers that may turn out to be detrimental.