Fundamentals of Business

Collusion

In the study of economics and market competition, collusion takes place within an industry when rival companies cooperate for their mutual benefit. Collusion most often takes place within the market form of oligopoly, where the decision of a few firms to collude can significantly impact the market as a whole. Cartels are a special case of explicit collusion. Collusion which is not overt, on the other hand, is known as tacit collusion.

Characteristics
Practices that facilitate tacit collusion include:

. Uniform prices
. A penalty for price discounts
. Advance notice of price changes
. Information exchange

Collusion is largely illegal in the United States, Canada and most of the EU due to antitrust law, but implicit collusion in the form of price leadership and tacit understandings still takes place.

Ways large companies legally restrain trade (anti competitive practices)
Mergers and Acquisitions
The phrase mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity.

Merger In business or economics a merger is a combination of two companies into one larger company.

Example
Extract from
Monday, 3 October 2005, 15:55 GMT 16:55 UK
Boots announces £7bn merger deal
High Street retailer Boots has said it is to merge with rival Alliance UniChem in a deal worth £7bn ($12bn). The merger will create one of Europe's largest drugs, beauty and healthcare groups with sales of more than £13bn. But about 1,000 jobs will go at the new firm to be called Alliance Boots which will have 2,600 stores in the UK. Although an established household name in the UK, Boots has been struggling in the face of stiff competition from supermarket giants Tesco and Asda.

Boots, which began trading in 1849, has seen its sales fall in recent years as supermarkets have aggressively targeted the toiletries and over the counter medicines markets.