Question

The boards of 2 major telecommunications companies recently agreed to a $16 billion merger that would create the world's largest telecommunications company in the world. Although some agree that the synergy between these companies could be dynamic, others feel consumers could ultimately pay the price for the merger, depending on which company becomes dominant in the various service areas.

Answer the following questions:

Why do you think consumer advocates have expressed concern over such merger possibilities?

Other than pricing, what are some pitfalls that consumers might have to deal with when 2 major companies merge?

What are the possible ethical dilemmas that are present in this example?

Answer 1

Consumers express concerns over merger as this creates larger force dominance and minimizes costs for both firms and in long run prices tend to rise as this tends to become monopolistic structure.

Other than pricing consumers have to deal with hassles of network issues as when networks merge lot of hassles in teems of services take place and consumers get confused about pricing structure of each firm.

Possible ethical dilemmas here could be at point where firms tend to increase prices exorbitantly and can lead to price collusion and customer loss. Or other way round firms can keep prices same and avoid customer loss but at cost of low profitability which is tradeoff and ethical dilemma of price rigging practice which is illegal as per Anti Trust regulations.