Evaluate the effect of mergers in businessin the last ten years Essay

Evaluate the effect of mergers in businessin the last ten years - Essay Example The strength of this trend is shown by the fact that the total dollar value of the mergers in 1997 was about 50 percent higher than those in 1996, itself a record year. Companies are combining to create new entities on a scale larger than anything before, reflecting a growing belief among Government regulators, and many business executives, that big business is not necessarily bad†( LESLIE WAYNE WAVE OF MERGERS IS RECASTING FACE OF BUSINESS IN U.S. Top of Form Most of the mergers in the United States have involved domestic corporations. But there have also been an increasing number of deals between American and overseas companies. And a similar wave of mergers is taking place abroad, with European and Asian companies seeking dominant roles in the global economy â€Å"The EC Merger Regulation and the U.S. Clayton Act, as interpreted and applied, clearly recognize that mergers that place a firm in a position where it can raise price without a sufficient threat from an existing challenger, assuming there are significant barriers to entry, can be anti-competitive. Indeed, the U.S. has been slightly more inclined in recent years to challenge mergers because they "tend to create a monopoly" and therefore produce anti-consumer and anti-competitive unilateral effects than was the case previously†. (Robert Pitofsky(1)Chairman, Federal Trade Commission http://www.ftc.gov/speeches/pitofsky/pitintermergers.shtm) . Mergers and acquisitions are fundamentally dynamic events that may involve significant changes in the business focus of the consolidating institutions. Indeed, when some companies in an industry merge, others come under pressure to do the same to remain competitive. When two companies merged together, their monopoly, their market shar e and the competitive capacity will increase. This will be a headache for the other companies in the same line. They will also think in terms of merging