The U.S.government would never approve a proposed merger between two firms that could significantly increase the newly merged firm's market power even if the efficiency gains from the newly merged firm could make consumers better off.

Question

Quizplus · Accepted Answer

The statement is not entirely true. The U.S. government may approve a proposed merger between two firms, even if it increases the newly merged firm's market power, as long as the expected efficiency gains can offset any potential harm to competition and consumers. The government conducts a rigorous analysis of each proposed merger to assess its potential impact on competition and consumer welfare. If the benefits of the merger are greater than any potential harm, the government may approve the merger with certain conditions or remedies to ensure that competition is maintained in the market.

The USGovernment Would Never Approve a Proposed Merger Between Two Firms