Mergers and Acquisitions: Competition and Cost–Benefit Analysis

Mergers present regulators with challenges and opportunities.  The challenge is to avoid viewing the merger as an opportunity to extract short-term benefits, while missing the long-term implications for competition and cost.  The opportunity is to use a merger case to establish the regulator's vision for industry structure and corporate structure.  This paper addresses six key components of merger analysis:  competition analysis, cost–benefit relationships, cost allocation problems, the relationship between merger case and rate case, quality of service and environmental effects.