Anti-Trust Legislation's Impact on Web-Based Businesses

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Mergers and acquisitions can be differentiated based on the type of way companies unite. Mergers take place when two or more companies come together and form one. Acquisitions take place when one company purchases another company and takes it under its umbrella. The two most common types of mergers and acquisitions are vertical integration and horizontal integration.  
Mergers and acquisitions can be differentiated based on the type of way companies unite. Mergers take place when two or more companies come together and form one. Acquisitions take place when one company purchases another company and takes it under its umbrella. The two most common types of mergers and acquisitions are vertical integration and horizontal integration.  
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To visualize what integration looks like picture a ladder. For vertical integration imagine the ladder being up-right. If a company were to move to a different step of the ladder, either up or down, they are vertically integrating. For horizontal integration imagine the ladder being sideways. If a company were to shift left or right, they are not moving to a different level and are horizontally integrating.  
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To visualize what integration looks like picture a ladder. For vertical integration, imagine the ladder being up-right. If a company were to move to a different step of the ladder, either up or down, they are vertically integrating. For horizontal integration imagine the ladder being sideways. If a company were to shift left or right, they are not moving to a different level and are horizontally integrating.
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Thus, vertical integration means merging and acquiring a company on a different level of the supply chain but within the same industry. Horizontal integration means merging or acquiring a company on the same level of the supply chain while which industry the other company was in, does not matter.
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An example of vertical integration would be a car manufacturer that builds the body of the car and buys the tires from another company but now merges with or acquires that tire company. The car manufacturer is on a different level of the supply chain than the tire company. A current example of horizontal integration is from when Facebook acquired Instagram because they are both on the same level of the supply chain and within the same industry.

Revision as of 10:20, 17 November 2019

INTRODUCTION

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DEFINITION- WHAT IS ANTI-TRUST?

Anti-trust laws are also called competition laws, specifically in Canada. Their main purpose is to prevent large, influential businesses from becoming a monopoly that will restrict competition by taking over the entire industry. A company being a monopoly does not mean they are breaking the law. However, if they are a purposefully bulldozing through the other competitors then they are causing an unnatural shift in the market. Thus, anti-trust laws are in place to provide an equal playing field while also protecting consumers.

Consumers are protecting from companies charging ridiculously inflated prices just because they are the only option a consumer has. Of course, if there were more competitors in the market, the more power a consumer would have to go from one option to another. This power is missing when there is only one competitor. Thus, anti-trust laws ensure that consumers are not being taken advantage of by taking the potential to misuse the power out of the hands of monopolies.

An equal playing field is created with the enforcement of anti-trust laws which is essential. Businesses have the ability to run with an idea and not fear being unable to even enter the market because one company has all the power, all the customers and are rich enough to completely obliterate them. With these laws, all companies at the very least have a fair chance at success.

More specifically, anti-trust laws stop anti-competitive behaviours such as:

- price rigging

- bid rigging

- mergers and acquisitions

- monopolization


Price Rigging

This is an illegal action that occurs when two or more powerful competitors come together to fix or inflate prices in order to earn a higher profit and have the ability to take out the rest of the competition. This usually occurs when two of the main competitors in the same industry join forces and make the competitors have to come to them as they are the only source. With consumers not having many other choices, they are forced to accept the inflated price no matter how ridiculous, depending on the importance of the product and its demand in the market.

Walmart and Sobey's did exactly this. Knowing their position in the market, they decided to work with one another. They increased the price of bread by $1.50 to increase their profits. This may not seem like a large shift however, it cost the average Canadian family an average of $370/year more than before. Both companies were able to rig the price of bread because of it being a basic necessity overall.


Bid Rigging

This takes place when there is an illegal pre-negotiated contract made between two or parties regarding the results of a bid. The deal will entail a guarantee of one party purposefully losing the bid by low balling the offer so that the other party can win. Of course, a contract needs to have consideration, meaning both parties must get something out of it.

Thus, the contract is usually made with the intent that the losing party will be the winning party the next time that there is a bid in which the winning party will now lose on purpose. Companies team up to do this so that both can keep winning one after the other, back to back. They can take advantage of all the benefits while restricting all other competitors from winning a bid.


Mergers & Acquisitions

Mergers and acquisitions can be differentiated based on the type of way companies unite. Mergers take place when two or more companies come together and form one. Acquisitions take place when one company purchases another company and takes it under its umbrella. The two most common types of mergers and acquisitions are vertical integration and horizontal integration.

To visualize what integration looks like picture a ladder. For vertical integration, imagine the ladder being up-right. If a company were to move to a different step of the ladder, either up or down, they are vertically integrating. For horizontal integration imagine the ladder being sideways. If a company were to shift left or right, they are not moving to a different level and are horizontally integrating.

Thus, vertical integration means merging and acquiring a company on a different level of the supply chain but within the same industry. Horizontal integration means merging or acquiring a company on the same level of the supply chain while which industry the other company was in, does not matter.

An example of vertical integration would be a car manufacturer that builds the body of the car and buys the tires from another company but now merges with or acquires that tire company. The car manufacturer is on a different level of the supply chain than the tire company. A current example of horizontal integration is from when Facebook acquired Instagram because they are both on the same level of the supply chain and within the same industry.


Monopolization

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SWOT ANALYSIS


Strengths

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Weaknesses

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Opportunities

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Threats

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History - Laws Timeline

Key Cases - Microsoft AT&T

Current Situation - Tech Giants Key Concerns (Interpretation & Enforcement)

Antitrust & IP - Patents Medicine Web Basics New Issues

What's next - Impact (pros/cons)

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