Oligopolies
Part 1) One proposed merger is Omnicare's bid to purchase Pharmerica (FTC, 2012). The FTC has defined the industry as "long-term care pharmacy" and these are the two largest firms in that industry. The FTC has sued to block this proposed takeover. Pharmerica is the only national competitor for Omnicare. Firms in this industry work with institutions to provide pharmacy services. The industry has some fragmentation, but there are only two national players in Omnicare and Pharmerica. The FTC feels that the combined entity would have such strong bargaining power that consumers would not have adequate choice, prices would rise and suppliers would also suffer from this extreme leverage.
From Omnicare's point-of-view, the merger would give it a dominant position in its industry. Pharmerica is resisting the takeover, as this is a hostile takeover. Pharmerica would likely be absorbed into Omnicare to the detriment of its own operations. Suppliers are major pharmaceutical firms, and they also sell to retail pharmacies and through other channels, so the impact on them would be less disastrous than the impact on end users, who are typically...
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