Question

what is the primary legal constraint on business combinations? why does such a constraint

Answer 1

A business combination refers to an event or transaction where an acquirer obtains control of a business. The potential antitrust suits are the primary legal constraint on business combinations. In U.S., antitrust law is a collection of state and federal government rules and policies that regulates the conduct and organization of corporations in business, often to promote competition. The U.S. government does not prefer the concentration of economic power that can result from business combinations and has enacted Federal antitrust laws for preventing the individual corporations from assuming a power in the market that makes them able to increase prices and limit their output without concern for any significant reaction from competitor. In U.S. to deal with antitrust problems there are two federal statutes, the Sherman Act and the Clayton Act.