Question

7. Explain how the lawfulness of mergers is examined under Section 7 of the Clayton Act?

Business Law questions.

Answer 1

• According to section 7 of the clayton Act, It mainly prohibits the mergers and acqusitions because this will result in rise in prices of good and even can create monopoly in future. If such situation arises of monopoly by merger the sellers can set high prices to earn hugh profits.
• We can have a look on mergers in two ways, it can benefit the consumers and competition in market in such a way that firm will work with more efficiently and effectively but it can even create monopoly resulting in higher prices and low quality of goods.
• The main question which hooked up in everyone's mind that mergers what was the purpose of proposing merger ? just to enhance the market or just to facilitate it.
• The Merger law is created to have a lot that after merger it does not haveany negative effects in the market. if your know about the hart- scott rodino act act it allow the agencies to first examine what will be the after effects if two or mimore firms go for merger. This agencies examines it before pre mergers requirements.
• The federal trade commission during the year look before thousand of files for mergers. In some of the cases it agencies have to go to the decision that after merger they cannot fix the competitve problem.and ultimately they have to go to the federal court for prevention of merger.
• In this law, all the information provided and obtained by the agencies are kept confidently and nit disclosed to anyone in any case.

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