Essay --

1. IntroductionAs the world gets more global Companies do their best to raise their profits and survive in the competition. Companies may switch to grow to survive, and one of the best ways to grow is by merging with another company. However, some merges may disbalance the development of market and disrupt the balance of original market structure. Perfect example is the Daimler and Chrysler spinal fusion it is such poweful global corporation that has its activities all around the world. It can use its strong position to influence the decisions of a presidency. If a government disagrees with the proposals, the corporation can easily move its bussines to another country this will sound to higher unemployment in the country so the government can not allow this and is forced to make a trade-off. Nowdays some corporations have bigger powers than some governments and therefore it is harder to resist the influence of the corporations. Mergers also lead to a decrease in competition in a market, this means higher prices and less choises for consumers. The European Union is trying to prevent that companies become in addition powerfull and that is why firms who seek to raise their profits through merger, must attain European commissions (EC) approval. In this paper I will focus on the Volvo/Scania merger case. Firstly I will explain what is merger, the benefits of firms to conduct merger and the effect of merger to market. Secondly I will briefly describe the deuce companies which argon involved in the Volvo/Scania merger. Finally, I will explain why did the EC blocked this merger. 2. What is mergerMerger is a process when at least two companies combine to form one single company.In general, there are three types of mergers, Horizontal Mergers, if both f... ...cks, buses and engines businesses. After selling its car division Volvo had just about no market share, to become pear-shapedr again Volvo decided to buy shares of his largest competitor Scania.(Case No COMP/M.1672 Volvo/Scania)The merge between these two companies would cause a large decrease in competition on the Swedish market for trucks. Volvo wanted to grow to achieve the economies of scale to compete in the global markets, but Volvo was prevented from doing so because the merger would give them too large market share in Nordic market.6. ConclusionThe EC has blocked the proposed merger of Volvo and Scania because of the competition concerns. The main indicate was that these two companies, which both make trucks and buses were the two largest competitors in most of their European markets, it would create significant barriers to entry the market by other companies.