- This topic has 1 reply, 2 voices, and was last updated 6 years ago by
.
- Posts
A prospective merger would need to result in a company having a market share greater than 80% before it can be described as monopoly. This statement is false according to BPP, so is it true if I change the statement to “A prospective merger would need to result in a company having a market share of 100% before it can be described as monopoly”.
Not quite.
A ‘pure’ monopoly is indeed where one company has 100% of the market. However from a business point of view a monopoly is when one company controls all or most of the market.
There is no definition as to what constitutes ‘most’ of the market, which is why in most countries (and certainly in the UK) there is a monopolies commission (part of government) which looks into mergers like this and decides whether or not it will create a monopoly (and if so stop it from going ahead). This is because to protect consumers it is important that there is competition to keep prices at a fair level.
- You must be logged in to reply to this topic.