AOL Time Warner Merger

Using the AOL/TW merger case study together with your experience, critically analyse the following:
a.) The need for mergers/takeovers to be regulated by government

This could be classified as a conglomerate merger because they are producing in slightly different (if related markets). Therefore the impact on competition is relatively muted.

It is argued that the merger may have several benefits such as:

Greater economies of scope – e.g. using internet for distribution of old media

Economies of scale – Lower average costs from bigger sized firm e.g. financial economies, risk bearing economies. These 2 may be important for a fledgling internet firm.

More Research and Development. With more profit and stability, the firm may have more confidence to invest in new technology important in this area.

General evaluation of Mergers

Benefits of Mergers

Disadvantages of Mergers

AOL Time Warner Merger at BBC