¶ … AT&T & T-Mobile merger.
In order to analyze this move properly, we will compare this merger with a case study of the merger of Frito-lay and Pepsi to create PepsiCo. At that time, the federal government of the United States was much more supportive of corporate mergers than currently. Without such hostility at the time to hinder it, the PepsiCo company has grown into a very competitive, innovative and healthy company that is indicative of letting the market do what it does best, select the survivors. As in nature, the financial and human stakeholders are healthier for it.
In the pursuit of developing corporate growth, alliances help stakeholders by promoting organizational efficiency and resource sharing through the medium of horizontal integration. The market determines optimal business size and organization based upon such factors as technological innovation. Governments should respect this natural selection and allow the market to choose via competition. If that competition leads to mergers and monopoly or oligopoly, this in the long-run will be the best result for the vast majority of stakeholders.
Analysis -- the PespsiCo Precedent
The snack chip market is a very competitive economic sector. The new-product failure rate is very high for the snack chip industry. Potato chip competitors usually rely heavily upon electronic and print media advertising, trade allowances and consumer promotions to stimulate sales. The manufacturers rely on price deals to attract new consumers. The innovative technology used to produce potato chips allows manufacturers to react very quickly to new products introduced by their competitors. Extensive sales as well as distribution systems that are employed by national brand competitors allows them to monitor their new product and promotion activities and then to place competing products quickly into the supermarkets. In February 1965, the boards of directors for Frito-lay, Inc. And Pepsi-Cola all announced a plan for a merger. On June 8, 1965, this merger of Frito-Lay and Pepsi-Cola Company was approved by shareholders. A new company called PepsiCo, Inc. was created. At merger tiem Frito-Lay owned some 46 manufacturing plants nationwide and also had more than 150 distribution centers across the United States ("fundinguniverse.com").
There were a larger number of forces that drove the two companies into each other's arms. The 1960s were a time of consolidation. A number of food and beverage firms were bought up by larger entities. Pepsi-Cola was at the time was considered a takeover target because it ran a distant second in the soft drink industry to Coca-Cola Company and also because little of the company's stock was in the hands of the management. Secondly, a force behind the merger was Frito-Lay's desire to more aggressively pursue ventures into overseas markets. The corporation's sales had been largely restricted to the U.S. And Canada. After this, it could take advantage of Pepsi's strong international operations. These channels were responsible for the sale of Pepsi products were in 108 countries. Thirdly, there was a perceived synergy between salty snacks and soft drinks. As Frito-Lay's CEO told Forbes in 1968, "Potato chips make you thirsty; Pepsi satisfies thirst." The plan to jointly market PepsiCo's snacks and soft drinks gave Pepsi a potential advantage in its battle with Coke. Unfortunately, these plans were scuttled by the resolution of a Federal Trade Commission antitrust suit against Frito-Lay in 1963. The FTC then ruled in late 1968 that PepsiCo could not create business tie-ins between Frito-Lay and Pepsi-Cola products in most of its advertising (an interesting infringement of free speech). PepsiCo was further barred from acquiring any soft drink or snack food maker for a period of ten years after that (ibid).
Analysis of the ATT and T-Mobile Merger
It is ironic that the Obama administration is in the process of attacking businesses such as ATT and T-Mobile in their efforts to maximize organizational efficiency while they provide government bailouts and subsidies to other businesses such as speculative banking houses like Goldman Sachs. In the area of banking, the administration is all for consolidation, but not in the area of telecommunications.
The pertinent legal framework must be considered first of all before we proceed. The present antitrust legislation is largely a product of the Clayton Antitrust Act of 1914. The law was passed to plug loopholes in the Sherman Antitrust Act. It is much more restrictive than the Sherman Act was because it...
Wireless Broadband Technology Overview of Wireless technology Presently it is quite evident to come across functioning of a sort of wireless technology in the form of mobile phone, a Palm pilot, a smart phone etc. With the inception of fast connectivity in the sphere of commerce it is customary and useful to operate from central locations communicating with the remote branches, conducting conferences in remote places, discussing with every body at every
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