Is the EU merger control regulation necessary Is it a good system Dissertation

Is the EU merger control regulation necessary Is it a good system - Dissertation Example The European Merger Control Law is designed to protect European consumers against unnecessary price increases or fluctuations as by-product of monopolies or companies gaining total control of the free market. Theorist opines that total control of the market of a single company can lead to economic dislocation if not contribute heavily to the economy’s collapse. The Merger Control Law prevents monopolistic prices to reign and ensures that the market is always at its equilibrium prices2 (Navarro, Font, Folguera, & Briones, 2002). Companies with vast financial resources use mergers and acquisitions as a strategy to control a substantial portion of the market instead of using the product’s merit to gain a good hold of the market. By buying off the competition and then killing that competitor’s product ensures total control of the primary product by the purchasing company. This would enable them to dictate the price of their product in the market by regulating its sup ply. Another strategy is to make use of the production or manufacturing facility of the purchased company to produce its product, thereby killing the presence of the competitor’s product in the market3 (Serdareviaa & Teply, 2010). However, not all mergers and acquisitions are intended for these purposes as some mergers and acquisition are conducted to ensure the survival of a product line as a viable alternative to the main line or flagship line of the company. These refer to products that are basically the same but cater to different market demography. Normally, in these instances, brand names are different but the products are basically the same only leveraged and marketed for a specific market segment4 (Hawk & Huser, 1996). The creation of the European Union saw the emergence of more laws and restrictions to regulate mergers and acquisitions of companies within the same industry covering the whole European market. Recognizing the potential and actual possibility of larger corporations merging or acquiring smaller companies from developing nations within the European Union, more stringent laws were enacted to regulate, control and govern merger and acquisition. Symmetrical laws from member nations already existing were aligned or harmonized with the European Union Law on Competition. The rules of procedure for the determination of whether the merger or concentration falls within the allowable parameters was laid down, including modes upon which to ventilate any opposition or dispute to the merger, suspension or annulment thereof. The purpose of the merger law is laudable but nonetheless it has been criticized as anti-establishment and counter-productive. Critics have postulated that the law impedes the natural progress or evolution of the free market as its protectionist nature favours smaller companies or shields those companies that are hard-pressed from competing against larger corporations from take-over whether hostile or friendly. If this line o f reasoning is followed however it is manifest that merger control is not necessarily advantageous as the options available for smaller companies to find other resources to enhance its market viability is similarly impeded or limited. There would be no other recourse