Question

1. In 1995 a proposed merger between Mann Theatres and AMC Theatres was rejected by the Federal Trade Commission on grounds that the merger would leave the new company with over 21 percent markets share and an un competitive advantage over film studios when negotiating screens and weeks in run. In 2009 an almost identical merger was approved by the Federal Trade Commission
   1. What factors may have contributed the Federal Trade Commission’s change of opinion?
   2. If you know that during the early 2000’s, there had been multiple mergers between film studios, would that influence your answer?

Answer 1

a)

The merger must be providing both the firms involved with better profits.

During the merger investigation, the agency must have seen that the merger will increase likelihood of coordination among firms in the Theatre market.

b)

Yes, given the fact that in the early 2000s, many film studios have been merged, then it would clearly state that the factors influencing the 2009 merger is different.

Given that 2000s has seen many mergers happening, the competitive level in the theatre market would require two firms to merge so as to be competitive in the market.