💥Will Big-Business Mergers Hurt Consumer?
A business merger is a combination of two or more business entities into one corporation. Business merger usually comes from two competing companies, producing the same product for the same market. Theoretically, a business merger would eliminate competition in the market before the previously competing companies now become one company.
Competition between companies promotes innovation and competitive prices because each company is trying to win a share of the market. However, after a business merger, the market becomes less competitive and more monopolistic. A monopolistic market discouraged innovation and put a tremendous market power on a single company. Thus, the company has more freedom to determine the price. And consumer exploitation is very likely to occur.
In your opinion, does a big-business merger will eventually hurt the consumer?
I think it will make things better. It will lead to production of quality products for consumers even if it may push prices a bit high. It’s a two way street, it haseboth advantages and disadvantages.
It is very difficult for me to comment on this question as in Australia we have legislation that does not allow companies to merge where the it will be to the detriment of the consumer. If a merger is under question and could be to the detriment to the consumer then the Australian Treasurer has the power to block this and the merger does not go through.
There have been a few in the last few years where the Australian Treasurer has ruled and has blocked mergers because they were not in the public interest and they would have reduced competition.
Big business mergers will increase quality of service and goods ,due to advantages of large scale production which leads to comparative advantages. I can give one example of two telecom campanies in my country where Airtel and Warid telecom combined together they almost competed with MTN ,
Mergers may improve product quality which benefits consumers. This quality improvement may come at lower cost because they merged entity may be able to eliminate certain overhead expenditure.
Merger effects on consumers can be positive or negative depending on the industry and market competition.
Business merged together will not hurt consumers rather, it will increase the income of goods and services