1. Competition and Monopolies
Chapter 9
Competition and Monopolies

2. Section 3: Government Policies Toward Competition
Antitrust Legislation
Passed to prevent monopolies from forming or to break up existing monopolies and stop interlocking directorates
Interlocking Directorates
Sherman Antitrust Act
Clayton Antitrust Act
See page 250

3. “Trustbuster”

4. 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

5. 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

6. news.xinhuanet.com

7. 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

8. 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

9. http://professorgeradin. blogs. com/photos/uncategorized/crappymerger

10. 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

11. Deregulation
Reduction of Government Regulation and control over business activity
Increased in 1980’s and 1990’s; the government found that too much regulation does not increase competition by preventing monopolies; instead it created so much red tape that people didn’t want to go into business this allowed the existing companies to further control the markets