Merger : A contractual and statutory process by which one corporation the surviving corporation acquires all of the assets and liabilities of another corporation the merged corporation , causing the merged corporation to become defunct.
As part of the merger process, the shareholders of the merged corporation receive. Consolidation : A contractual and statutory process by which. Any merger or consolidation is governed by the laws of one or more of the states , each of which sets forth its own procedural requirements. However , in general:. While it sounds simple, this could take months to accomplish. If the necessary majority of the corporation's shareholders approve a merger or consolidation, it will go forward, and the shareholders will be compensated.
However no shareholder who votes against the transaction is required to accept shares in the surviving or successor corporation. The main purpose of the market extension merger is to make sure that the merging companies can get access to a bigger market and that ensures a bigger client base. Eagle Bancshares is headquartered at Atlanta, Georgia and has workers.
Eagle Bancshares also holds the Tucker Federal Bank, which is one of the ten biggest banks in the metropolitan Atlanta region as far as deposit market share is concerned. One of the major benefits of this acquisition is that this acquisition enables the RBC to go ahead with its growth operations in the North American market.
With the help of this acquisition RBC has got a chance to deal in the financial market of Atlanta , which is among the leading upcoming financial markets in the USA. This move would allow RBC to diversify its base of operations. A product extension merger takes place between two business organizations that deal in products that are related to each other and operate in the same market.
The product extension merger allows the merging companies to group together their products and get access to a bigger set of consumers. This ensures that they earn higher profits. The acquisition of Mobilink Telecom Inc. Broadcom deals in the manufacturing Bluetooth personal area network hardware systems and chips for IEEE Mobilink Telecom Inc.
It is also in the process of being certified to produce wireless networking chips that have high speed and General Packet Radio Service technology. It is expected that the products of Mobilink Telecom Inc. The Agency generally will consider timely only those committed entry alternatives that can be achieved within two years from initial planning to significant market impact.
In these circumstances, if entry only can occur outside of the two year period, the Agency will consider entry to be timely so long as it would deter or counteract the competitive effects of concern within the two year period and subsequently. An entry alternative is likely if it would be profitable at premerger prices, and if such prices could be secured by the entrant. Thus, entry is unlikely if the minimum viable scale is larger than the likely sales opportunity available to entrants.
Minimum viable scale is the smallest average annual level of sales that the committed entrant must persistently achieve for profitability at premerger prices. Sources of sales opportunities available to entrants include: a the output reduction associated with the competitive effect of concern, 32 b entrants' ability to capture a share of reasonably expected growth in market demand, 33 c entrants' ability securely to divert sales from incumbents, for example, through vertical integration or through forward contracting, and d any additional anticipated contraction in incumbents' output in response to entry.
Demand growth or decline will be viewed as relevant only if total market demand is projected to experience long-lasting change during at least the two year period following the competitive effect of concern. Inasmuch as multiple entry generally is possible and individual entrants may flexibly choose their scale, committed entry generally will be sufficient to deter or counteract the competitive effects of concern whenever entry is likely under the analysis of Section 3.
However, entry, although likely, will not be sufficient if, as a result of incumbent control, the tangible and intangible assets required for entry are not adequately available for entrants to respond fully to their sales opportunities.
In addition, where the competitive effect of concern is not uniform across the relevant market, in order for entry to be sufficient, the character and scope of entrants' products must be responsive to the localized sales opportunities that include the output reduction associated with the competitive effect of concern.
For example, where the concern is unilateral price elevation as a result of a merger between producers of differentiated products, entry, in order to be sufficient, must involve a product so close to the products of the merging firms that the merged firm will be unable to internalize enough of the sales loss due to the price rise, rendering the price increase unprofitable.
Competition usually spurs firms to achieve efficiencies internally. Nevertheless, mergers have the potential to generate significant efficiencies by permitting a better utilization of existing assets, enabling the combined firm to achieve lower costs in producing a given quantity and quality than either firm could have achieved without the proposed transaction.
Indeed, the primary benefit of mergers to the economy is their potential to generate such efficiencies. Efficiencies generated through merger can enhance the merged firm's ability and incentive to compete, which may result in lower prices, improved quality, enhanced service, or new products. For example, merger-generated efficiencies may enhance competition by permitting two ineffective e. In a coordinated interaction context see Section 2.
In a unilateral effects context see Section 2. Efficiencies also may result in benefits in the form of new or improved products, and efficiencies may result in benefits even when price is not immediately and directly affected.
Even when efficiencies generated through merger enhance a firm's ability to compete, however, a merger may have other effects that may lessen competition and ultimately may make the merger anticompetitive.
The Agency will consider only those efficiencies likely to be accomplished with the proposed merger and unlikely to be accomplished in the absence of either the proposed merger or another means having comparable anticompetitive effects. These are termed merger-specific efficiencies. Efficiencies are difficult to verify and quantify, in part because much of the information relating to efficiencies is uniquely in the possession of the merging firms.
Moreover, efficiencies projected reasonably and in good faith by the merging firms may not be realized. Therefore, the merging firms must substantiate efficiency claims so that the Agency can verify by reasonable means the likelihood and magnitude of each asserted efficiency, how and when each would be achieved and any costs of doing so , how each would enhance the merged firm's ability and incentive to compete, and why each would be merger-specific.
Efficiency claims will not be considered if they are vague or speculative or otherwise cannot be verified by reasonable means.
Cognizable efficiencies are merger-specific efficiencies that have been verified and do not arise from anticompetitive reductions in output or service. Cognizable efficiencies are assessed net of costs produced by the merger or incurred in achieving those efficiencies. The Agency will not challenge a merger if cognizable efficiencies are of a character and magnitude such that the merger is not likely to be anticompetitive in any relevant market.
In conducting this analysis, 37 the Agency will not simply compare the magnitude of the cognizable efficiencies with the magnitude of the likely harm to competition absent the efficiencies. The greater the potential adverse competitive effect of a merger--as indicated by the increase in the HHI and post-merger HHI from Section 1, the analysis of potential adverse competitive effects from Section 2, and the timeliness, likelihood, and sufficiency of entry from Section the greater must be cognizable efficiencies in order for the Agency to conclude that the merger will not have an anticompetitive effect in the relevant market.
When the potential adverse competitive effect of a merger is likely to be particularly large, extraordinarily great cognizable efficiencies would be necessary to prevent the merger from being anticompetitive.
In the Agency's experience, efficiencies are most likely to make a difference in merger analysis when the likely adverse competitive effects, absent the efficiencies, are not great. Efficiencies almost never justify a merger to monopoly or near-monopoly.
The Agency has found that certain types of efficiencies are more likely to be cognizable and substantial than others. For example, efficiencies resulting from shifting production among facilities formerly owned separately, which enable the merging firms to reduce the marginal cost of production, are more likely to be susceptible to verification, merger-specific, and substantial, and are less likely to result from anticompetitive reductions in output. Other efficiencies, such as those relating to research and development, are potentially substantial but are generally less susceptible to verification and may be the result of anticompetitive output reductions.
Yet others, such as those relating to procurement, management, or capital cost are less likely to be merger-specific or substantial, or may not be cognizable for other reasons. In such circumstances, post-merger performance in the relevant market may be no worse than market performance had the merger been blocked and the assets left the market.
A merger is not likely to create or enhance market power or facilitate its exercise if the following circumstances are met: 1 the allegedly failing firm would be unable to meet its financial obligations in the near future; 2 it would not be able to reorganize successfully under Chapter 11 of the Bankruptcy Act; 38 3 it has made unsuccessful good-faith efforts to elicit reasonable alternative offers of acquisition of the assets of the failing firm 39 that would both keep its tangible and intangible assets in the relevant market and pose a less severe danger to competition than does the proposed merger; and 4 absent the acquisition, the assets of the failing firm would exit the relevant market.
A similar argument can be made for "failing" divisions as for failing firms. First, upon applying appropriate cost allocation rules, the division must have a negative cash flow on an operating basis. Second, absent the acquisition, it must be that the assets of the division would exit the relevant market in the near future if not sold. Due to the ability of the parent firm to allocate costs, revenues, and intracompany transactions among itself and its subsidiaries and divisions, the Agency will require evidence, not based solely on management plans that could be prepared solely for the purpose of demonstrating negative cash flow or the prospect of exit from the relevant market.
Third, the owner of the failing division also must have complied with the competitively preferable purchaser requirement of Section 5. Merger subject to section 7 are prohibited if their effect "may be substantially to lessen competition, or to tend to create a monopoly.
Mergers subject to section 1 are prohibited if they constitute a "contract, combination. Mergers subject to section 5 are prohibited if they constitute an "unfair method of competition. These Guidelines update the Merger Guidelines issued by the U. The Merger Guidelines may be revised from time to time as necessary to reflect any significant changes in enforcement policy or to clarify aspects of existing policy. For example, the burden with respect to efficiency and failure continues to reside with the proponents of the merger.
Sellers with market power also may lessen competition on dimensions other than price, such as product quality, service, or innovation. Probable supply responses that require the entrant to incur significant sunk costs of entry and exit are not part of market measurement, but are included in the analysis of the significance of entry.
Entrants that must commit substantial sunk costs are regarded as "committed" entrants because those sunk costs make entry irreversible in the short term without foregoing that investment; thus the likelihood of their entry must be evaluated with regard to their long-term profitability. Although discussed separately, product market definition and geographic market definition are interrelated.
In particular, the extent to which buyers of a particular product would shift to other products in the event of a "small but significant and nontransitory" increase in price must be evaluated in the context of the relevant geographic market. Throughout the Guidelines, the term "next best substitute" refers to the alternative which, if available in unlimited quantities at constant prices, would account for the greatest value of diversion of demand in response to a "small but significant and nontransitory" price increase.
The terms of sale of all other products are held constant in order to focus market definition on the behavior of consumers. Movements in terms of sale for other products, as may result from the behavior of producers of those products, are accounted for in the analysis of competitive effects and entry.
See Sections 2 and 3. For example, in a merger between retailers, the relevant price would be the price of a product to consumers.
In the case of a merger among oil pipelines, the relevant price would be the tariff--the price of transportation service. This arbitrage is inherently impossible for many services and is particularly difficult where the product is sold on a delivered basis and where transportation costs are a significant percentage of the final cost. If uncommitted entrants likely would also remain in the market and would meet the entry tests of timeliness, likelihood and sufficiency, and thus would likely deter anticompetitive mergers or deter or counteract the competitive effects of concern see Section 3, infra , the Agency will consider the impact of those firms in the entry analysis.
Under other analytical approaches, production substitution sometimes has been reflected in the description of the product market. For example, the product market for stamped metal products such as automobile hub caps might be described a "light metal stamping," a production process rather than a product. The Agency believes that the approach described in the text provides a more clearly focused method of incorporating this factor in merger analysis.
If production substitution among a group of products is nearly universal among firms selling one or more of those products, however, the Agency may use an aggregate description of those markets as a matter of convenience. Where all firms have, on a forward-looking basis, an equal likelihood of securing sales, the Agency will assign equal market shares. The constraining effect of the quota on the importer's ability to expand sales is relevant to the evaluation of potential adverse competitive effects.
See Section 2. The HHI ranges from 10, in the case of a pure monopoly to a number approaching zero in the case of an atomistic market. Although it is desirable to include all firms in the calculation, lack of information about small firms is not critical because such firms do not affect the HHI significantly. The increase in concentration as measured by the HHI can be calculated independently of the overall market concentration by doubling the product of the market shares of the merging firms.
The increase in the HHI therefore is represented by 2 ab. But excess capacity in the hands of non-maverick firms may be a potent weapon with which to punish deviations from the terms of coordination. Similarly, in a market where product design or quality is significant, a firm is more likely to be an effective maverick the greater is the sales potential of its products among customers of its rivals, in relation to the sales it would obtain if it adhered to the terms of coordination.
The likelihood of expansion responses by a maverick will be analyzed in the same fashion as uncommitted entry or committed entry see Sections 1. Similarly, in some markets sellers are primarily distinguished by their relative advantages in serving different buyers or groups of buyers, and buyers negotiate individually with sellers. Here, for example, sellers may formally bid against one another for the business of a buyer, or each buyer may elicit individual price quotes from multiple sellers.
A seller may find it relatively inexpensive to meet the demands of particular buyers or types of buyers, and relatively expensive to meet others' demands. Competition, again, may be localized: sellers compete more directly with those rivals having similar relative advantages in serving particular buyers or buyer groups.
For example, in open outcry auctions, price is determined by the cost of the second lowest cost seller. A merger involving the first and second lowest-cost sellers could cause prices to rise to the constraining level of the next lowest-cost seller. Information about consumers' actual first and second product choices may be provided by marketing surveys, information from bidding structures, or normal course of business documents from industry participants.
The timeliness and likelihood of repositioning responses will be analyzed using the same methodology as used in analyzing uncommitted entry or committed entry see Sections 1. The timeliness and likelihood of non-party expansion will be analyzed using the same methodology as used in analyzing uncommitted or committed entry see Sections 1. Supply responses that require less than one year and insignificant sunk costs to effectuate are analyzed as uncommitted entry in Section 1.
Firms which have committed to entering the market prior to the merger generally will be included in the measurement of the market. Only committed entry or adjustments to pre-existing entry plans that are induced by the merger will be considered as possibly deterring or counteracting the competitive effects of concern.
Where conditions indicate that entry may be profitable at prices below premerger levels, the Agency will assess the likelihood of entry at the lowest price at which such entry would be profitable. While MES is the smallest scale at which average costs are minimized, MVS is the smallest scale at which average costs equal the premerger price.
The expected path of future prices, absent the merger, may be used if future price changes can be predicted with reasonable reliability. The minimum viable scale of an entry alternative will be relatively large when the fixed costs of entry are large, when the fixed costs of entry are largely sunk, when the marginal costs of production are high at low levels of output, and when a plant is underutilized for a long time because of delays in achieving market acceptance.
Five percent of total market sales typically is used because where a monopolist profitably would raise price by five percent or more across the entire relevant market, it is likely that the accompanying reduction in sales would be no less than five percent. Entrants' anticipated share of growth in demand depends on incumbents' capacity constraints and irreversible investments in capacity expansion, as well as on the relative appeal, acceptability, and reputation of incumbents' and entrants' products to the new demand.
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