ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -There are regulatory issues as well. If horizontal mergers within the same industry concentrate market share among a small number of companies, it creates an oligopoly. If one company ends up with a dominant market share, it has a monopoly.

Detailed explanation-2: -Horizontal mergers occur when companies of the same industry merge. They often result in a way to eliminate competition by creating one powerful company instead of two competitors. Horizontal mergers can greatly increase revenues, as the combined companies have access to a greater variety of products or services.

Detailed explanation-3: -When undergoing a horizontal integration, however, it is important to look out for the disadvantages, such as increased regulatory scrutiny, failure to combine synergies, and destroying value, which would make the entire process worthless and costly.

Detailed explanation-4: -Horizontal integration occurs when two businesses merge that produce goods or services at the same level in the value chain. The reason for doing so is to create economies of scale, as well as to cross-sell to each other’s customers. This can result in the creation of a monopoly or oligopoly.