Question

(2.4 When is a person or not lequel purpose of such a filing? 2.5 Give examples of the types of actions that may be required by the parties to a posed merger subject to an FTC consent decree. .6 Ameritech and SBC Communications received permission from the FCC to combine form the nation's largest local telephone company. The FCC gave its approval, subiet to conditions requiring that the companies open their markets to rivals and enter new markets to compete with established local phone companies, in an effort to reduce the cost of local phone calls and give smaller communities access to appropriate phone service. SBC had considerable difficulty in complying with its agreement with the FCC. Over an 18-month period, SBC paid the US government $38.5 million for failing to provide rivals with adequate access to its network. The government noted that SBC failed to make available its network in a timely manner, meet installation deadlines, and notify competitors when their orders were filled. Comment on the fairness and effectiveness of using the imposition of heavy fines to promote government-imposed outcomes rather than free market-determined outcomes. 2.7 In an effort to gain approval of their nm

Answer 1

In economics, Free Market is a system where the demand and supply are driven by Market forces rather than government imposed restrictions. However, Monopolies may be created in a Free Market. To curb this, government imposes restrictions on companies to regulate Monopolies and promote competition.

In the given case, Ameritech and SBC Communications combined to form the nation's largest telephone company.
The government imposed restrictions on the Merger in order to reduce cost of phone calls and give phone access to smaller communities. It can be observed that the government imposed such restrictions for the benefit of the telephone industry as well as the minor communities, thereby benefiting the users. If such restrictions aren't imposed, the new merged entity would be able to control and manipulate the market such as limit supply or charge high price thus creating inequality in the market.

Hence, the fine imposed by the Government to promote government imposed outcomes seems fair. Allowing market forces to regulate demand and supply could be detrimental to the telephone industry and the minor communities.