Wednesday, November 30, 2011

Preventing more Merger Movement

In an article from The Economist, released November 26th, there is a discussion of the potential merger of AT&T and T-Mobile USA. Unfortunately for AT&T, America’s Federal Communication Commission (FCC) has recommended that the deal be reviewed by an administrative judge “because he [Julius Genachowski, head of the FCC] did not consider it to be in the public interest.” In class, we have discussed the Great Merger Movement that occurred at the turn of the 20th century, in which firms underwent horizontal integration to achieve greater efficiency of scale and therefore greater competitive advantage. However, in today’s “big business” environment, government regulation is in place to prevent too much horizontal integration that could lead to unfair monopolies, and the crowding out of smaller competitors. According to the article, AT&T plans to continue its attempt to convince the Department of Justice and the Federal Communication Commission to allow the merger to take place, even though the company acknowledges that the chances of gaining permission, at this point, are slim.
http://www.economist.com/blogs/schumpeter/2011/11/att-and-t-mobile-usa

No comments:

Post a Comment