Understanding Mergers
Antonio: Hey you! I see you staring… my sign here probably caught your attention, huh? Works like a charm… Well, now that I have it, let me tell you what's going on. Ok, so—there used to be three different places you could get ice cream in this town: Triple Scoop's Ice Cream, Mr. Cold's Creamery, and Chill Time Frozen Treats. They all carried your basic flavors: vanilla, chocolate, and strawberry—plus Mr. Cold's Creamery also had specialty flavors like chocolate chip cookie dough that sold for two dollars a scoop. Mmmm… cookie dough… all that chocolaty chewy sweet goodness…
Vera: Uhhh… I think we've lost him. What he was saying was, a little while ago, Triple Scoop's bought out Mr. Cold's Creamery and they merged their stores into one chain renamed Triple Cold Creamery, which now stands before you. After the merger, we kept selling all the same flavors as before, including specialty scoops like cookie dough…
Antonio: Cookie dough!?
Vera: Plus, as we got more business, we bought more from our suppliers—who gave us better deals, so we could pass that savings on to our customers and lower our prices. Now, any flavor scoop is just one dollar! It ended up being great for consumers.
Antonio: Yeah, that one was good, but now Chill Time wants to merge with Triple Cold. If that merger happened, Triple Chill would be the only place left to get a cone around here, and they'd have an ice cream monopoly! With no one to compete against, they could raise the prices to two dollars a scoop, and stop offering specialty flavors all together. Higher prices, no more cookie dough… It's tragic! Any way you look at it, it could be bad news for ice cream lovers everywhere.
Vera: It would be bad news. But, you know, some mergers have to be checked out by the FTC before they can happen. If they decide that the merger really would be bad for consumers, they can go to court to try to stop it. "Protecting Consumers, Promoting Competition." It's what they do best.
Antonio: That's amazing news! So if they're going to check out the merger, why am I still standing here with this sign? My arm is killing me!
Vera: Don't get too excited. I said some mergers have to be reviewed—not all. We're a pretty small chain, so the FTC might not look at a merger like ours. They usually only check out the really big ones.
Antonio: But this is big! Don't they understand that we've got chocolate chip cookie dough on the line? Chocolate chip cookie dough!!!
Vera: Whoa there. buddy. Calm down! If we did end up merging and our prices go up, or our ice cream isn't as tasty, it probably wouldn't be too long before another ice cream place popped up again, trying to offer something better. That's competition at work! Each store will try to outdo the other again, and I'm sure cookie dough would be in the mix.
Antonio:Cookie dough?
Vera: Fine… but this is the last freebie! We've got to make money to stay in business, ya know!
Antonio:I could kiss you.
Vera: Please don't.