march 26, 2015 aim: how does the government regulate...
TRANSCRIPT
Aim: How does the government regulate competition?
• Do Now: Answer the following:
– What is the historical context?
– What is the point of view?
Government policies toward competition
• Antitrust legislation
– Sherman Antitrust Act (1890)
– Clayton Antitrust Act (1914)
Prevent new monopolies from forming, break up existing monopolies
Regulatory Agencies
• Oversee various types of industries to ensure fair pricing and product quality
• Exs:
– Federal Trade Commission
– Food and Drug Administration
– Federal Communications Commission
– Environmental Protection Agency
Mergers
• A combined company that results when one corporation buys more than half of the stock in another corporation and therefore controls the 2nd corporation
• There are 3 types of mergers
– Horizontal
– Vertical
– Conglomerate
Horizontal Merger
• Merger of two companies in the same business to expand control of market
• Exs:
– Sandra’s Scented Candles takes over Flora’s Floating Candles
– Dodge takes over Ford
Vertical Merger
• One company takes over another company in a related industry have more access to materials; make the production process more efficient
• Exs:
– Sandra’s Scented Candles takes over Wally’s Wax Factory
– Ford takes over Michelin Tires
Conglomerate Merger
• One company takes over at least three other companies in unrelated industries diversification of product line; if one fails, the other products can save the company.
• Exs:
– Ford takes over Johnson & Johnson, Dell, and Nabisco
1982 – The United States v. AT & T 1984 – AT&T splits into several smaller companies “The Baby Bells”
Is antitrust legislation relevant today?
• How successful do you think it is?
• Write a response in your notes.