Market or monopoly power is something that has been seriously contested and still is debated even today. There is need to understand why some people are against these forces. Research has shown that the definition of monopoly power as given by the courts is not only vague but also inconsistent. The confusion that the courts are having about market monopoly could be as a result of significant changes in the markets. However, there is a general anti-competitive trait in monopoly systems that can eventually affect the consumers negatively. To understand the anti-trust rules and the different actions taken by the justice department against monopolies, it is important to answer the following questions.
Q1. Are the U.S markets becoming less competitive because of mergers and acquisitions?
Mergers and acquisitions refer to a relationship where two companies come together. In this kind of relationship, one of the companies in question absorbs the other completely. In most cases, the company with the lower identify loses its identification and becomes part of the significant corporation whose identity is maintained. The corporation that survives these mergers assumes all responsibilities and privileges as well as any liabilities. These mergers and acquisitions are controlled and regulated by the federal government. The regulation in this case relies on the fact that the merger eliminates all forms of competition between the merging firms. There is the obvious concern on whether the mergers and acquisitions are meant to increase or decrease competition and its advantages in the U.S economy.
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To address this concern, there is need to look at the different merger types and how they can affect the competition. Horizontal merges tend to remove the potential competition between the merging firms. The second challenge concerns the unification of merging firms, which in turn tends to increase market power and raise prices when they decide to reduce output. Thirdly, there is the possibility of increased market concentration which may strengthens the market’s participants ability to make decisions on how to control price and outputs. Vertical mergers on the other hand helps in internalizing transaction between supplier and manufacturers as well as with the internalizing of management process which improve performance monitoring. Conglomerate mergers on the other hand have no direct effect on competition since they are either a geographic or a product extension. However, they still have the potential of reducing future competition by removing the competition that the acquiring firm might have faced independently (Whinston, 2008) .
Q2. Are US markets becoming more competitive because of new technology?
The adoption of the internet and commercial software has accelerated the competition among U.S industries. While there may be other reasons for this great growth spurt such as improved management and opening up of global markets, IT and related technology continue to be a significant catalyst for such growth rates. This explains why companies are continuing to make major investments in IT. Companies that have embraced and those that continue to adopt innovative technological advancements in their production, manufacturing and management have a better competitive advantage compared to those who do not. It is safe therefore to conclude that U.S markets are becoming more competitive with new technology. Consumers are also changing their preferences and the way they make decisions. An increasing trend shows most consumers inclining towards technology advancements hence industry players must step up or risk being phased out by the competition.
Q3. Are US markets becoming less or more competitive because of globalization?
A decade ago, the U.S was seriously shocked by global competition as competing countries such as Japan and China rose the ranks to becoming the number one manufacturers of textile and machinery. The US seemed to be struggling with matching the quality and prices of manufactured goods. It was feared that the US would fall under the shadow of these manufacturing giants that were fast taking positions in the global economy. However, this was not to be the case for long as the indicator today show that everything is different. The US is still the leading innovator, as t seems to have bounced back and reclaimed its position. It has been able to improve its manufactured product quality, reduce prices as well as reduce the time span for product cycles. In fact, the US has once again become the envy of the world, as it has been able to increase job creation, sustain its economic growth as well as reduce its deficits. However, there are still challenges of how new innovations and technologies are compressing distance and time as well as diffusing knowledge not to mention the industrial transformations happening all over. The ever-growing concern is that the world will catch up.
Q4. Is enough information available for wise antitrust enforcement?
The anti-trust laws have been the protector of competitive state in the US for over a century now. These laws enhance consumer choices and foster competitive pricing that is a necessity in the free market. Although these laws were applied in international commerce they are especially more important today (Hovenkamp, 1985) . The significance of these laws in the world is the fact that they open up free markets and prevents any conduct that is likely to interfere with competition. To answer this question, the enforcement of this law is even more crucial since the hindrances to competition are even more apparent today. Mergers and acquisitions should not be permitted to infringe on the freedom of free trade.
References
Hovenkamp. (1985). Economics and federal antitrust law. Economics and federal antitrust law.
Whinston. (2008). Lectures on antitrust economics. MIT Press Books, 1.
