Which statement about mergers is true?

Which statement about mergers is true?

• A. The competition policy can block mergers if they lessen competition
• B. Mergers are always approved by competition policy
• C. Mergers never affect consumers
• D. Competition policy always encourages mergers

Answer: (A)

Competition policy weighs how a proposed merger would affect rivalry in the market. The true statement is that competition policy can block mergers if they lessen competition. Regulators look at whether a merger would concentrate the market, reduce competition, or harm consumers through higher prices, fewer choices, or slower innovation. If the deal would undermine competition, they may block it or require remedies like divestitures before approval. Mergers are not automatically approved, and they do affect consumers in various ways, so they’re not guaranteed to be beneficial. Regulators don’t always encourage mergers; they balance potential efficiencies against the risk of reduced competition. The other options presume automatic approval, no consumer impact, or universal encouragement, which doesn’t align with how competition policy actually works.

Competition policy weighs how a proposed merger would affect rivalry in the market. The true statement is that competition policy can block mergers if they lessen competition. Regulators look at whether a merger would concentrate the market, reduce competition, or harm consumers through higher prices, fewer choices, or slower innovation. If the deal would undermine competition, they may block it or require remedies like divestitures before approval.

Mergers are not automatically approved, and they do affect consumers in various ways, so they’re not guaranteed to be beneficial. Regulators don’t always encourage mergers; they balance potential efficiencies against the risk of reduced competition. The other options presume automatic approval, no consumer impact, or universal encouragement, which doesn’t align with how competition policy actually works.