3.6.1a Government regulation

Question 1

Under what conditions does CMA investigate a merger

Answer 1

• combined firm would have a market share of over 25%
• the combined firm would have a turnover of over £70m

Question 2

Define turnover

Answer 2

How much money a business earns in a period of time

Question 3

Give an example of CMA merger investigation in 2019

Answer 3

• CMA
• Tesco/Booker
• Food market
• 2017
• approved

Question 4

Give an exmaple of an EU competition comission merger investigation in 2019

Answer 4

• Siemens of germany /Alstom of france
• Train market
• 2019
• blocked; higher prices expected for train signals and trains produced by the firms
• wouldve created a firm making 15bn euros in annual revenues but was blocked bc firms have a large presence in Europe and concerns that deal could challenge eu comp

Question 5

Give an example of CMA merger investigation 2019

Answer 5

• Sainsburys/asda industry
• supermarket industry
• 2019
  -blocked; combined firms would have market share of 30%

Question 6

Give an example of a US department for justice merger investigation

Answer 6

T mobile/sprint
- telecommunication market
- 2020
- approved

Question 7

Conditions needed for merger control

Answer 7

competent regulators, accurate and up to date info, sufficient time to thorourghly investigate

Question 8

Potential consequences of sainsbury asda merger

Answer 8

• the monoposony power resulting from the merger meant merger was blocked due to serious comp concerns in 463 areas of the uk
• couldn’t even convince CMA by selling stores in areas with concerns

Question 9

Describe ladbrokes and coral merger in 2016

Answer 9

was approved on the basis that 400 shops were sold in local areas where competition would be significantly lessened

Question 10

Ryanair and Aerlingus merger

Answer 10

However, the European Commission blocked the merger of Ryanair & Aerlingus in 2010 as they would control more than than 80% of all Europe flights from Ireland.

Question 11

Define regulatory capture

Answer 11

Regulatory capture is a form of government failure. It happens when a government agency operates in favour of producers rather than consumers.