Introduction
Comcast and Time warner Cable are two competitors in the provision of cables in the market. The two companies are selling the same product in the market on very competitive market forces. The two companies, therefore, merges in order reduce the competition and working together to achieve the same goals and objective since they provide the same products. When these two companies merge, the levels of competition in the market will reduce effectively enabling them to have almost full control of the market through monopoly. The mergers will be able to determine prices and provide products to the customers without any competitive pressures. The need for a higher bargaining power in the market may also be the other reason for the merger of the two companies. This will enable the two companies to penetrate into the global markets at the same time. The two companies also merged in order to reduce the costs relating to marketing and promotional activities in the market. The cost of marketing or advertising will reduce effectively by combining the costs of advertisements and marketing in general. This will also enable the two companies to share jointly the costs of technological advancements that are not of great value to the company individually. The merger will also create a monopoly of power leading to negative effects on the society due to lack of competition.
DOJ, and FCC may consider various effects of the monopoly on the welfare of the customers and the whole market in general. The DOJ and FCC consider the measures to reduce the market barriers which may be created by the customers. They should also put measures in place to protect the employees and the whole society from the stringent market prices set by the mergers. The two bodies should also ensure that market regulations are put in place in order to reduce the negative effects on the economy. DOJ, and FCC should also put measures in place in order to ensure the protection of other small firms in the market due to the barriers created by the monopolistic competition. The two bodies should also put strategies in place in order to ensure that the merger will ensure corporate responsibility in the society. DOJ, and FCC may show the monopolistic competitive structures in relation to price differentiation in the market. They may also show the inefficiency of corporate social responsibility services in the market.
In the long run, the merger of the two companies may be challenged by the arguments of DOC and FCC. The evidence provided by the two bodies concerning monopoly structures is enough to challenge the merger effects caused the two firms. The two bodies may suggest that the cost of operations of the two companies may run out control due to the expansion in its operations. This is disadvantageous in the long run because the companies may result in making losses due to difficulties in managing the cost structure leading to loss of jobs by the employees in the conglomerate. The arguments of FCC and DOJ may help to challenge the aspects relating to the negative externalities of the monopoly. The societal negative effects and aspects of corporate social responsibilities are also grounds that may help in challenging fully the merger of the two firms.
The firms will have to take into consideration the pricing policies. The monopoly market structure will be suitable for the mergers so as to cover a large market scope. The monopolistic market structure is of the essence in making supernormal profits while at the same time forcing the competitors out of the market. The monopolistic power helps the mergers to reduce competition through effective pricing strategies in the market. The firms should, therefore, put the pricing strategies in place so as to differentiate the markets. Price differentiation in the markets will help to gain a wide market scope. The firms will fetch profits from all sectors of the economy regardless of the income levels of the customers or consumers in the market. The firms should also put measures in place in order to ensure that the average fixed costs are decreased effectively in order to boost the profitability of the firms in the long run. This will help the firms in gaining economic stability in the markets or business operations.
In relation to the merger, the two firms should get into an agreement in relation to the management structure of the company formed. The aspects relating to the shareholders and ownership of the company should also be done in a clear agreement. The agreement should also entail the aspects relating to the number of employees to retained or retrenched in the exercise of merging. The two firms should also agree on the aspects relating to the cost management in the company. The issues relating to the taxation and legal status of the company is also an important matter to be considered in the concession. The two firms should also agree on the market scope and coverage in the provision of their services.
