Why should mergers and acquisitions need financial regulation? Surely the joining of two companies is the business of executives, M&A lawyers and shareholders. What is there to regulate?
Shareholders need protection to ensure they're not getting a raw deal, but this is usually achieved at boardroom level – if not, shareholder activist groups step in.
It is not the shareholders that competition authorities are concerned about, but the consumers of goods and services produced by these companies.
The rights and best interests of consumers are not necessarily served by the marriage of two rival companies.
If these authorities believe that the merger of two companies in a particular industry would lead to a reduction in competition – that post-merger consumers would face higher prices and lower quality products – then that merger cannot be allowed to go ahead without restrictions.
A monopoly exists if one company comes to dominate an industry sector. A cartel is similar but formed of several companies, although they have similar goals and so cartels are usually thought of as monopolistic.
Monopolies are rarely allowed to exist because they discourage competition.
Without competition consumers get a raw deal as monopolistic companies can sidestep the natural laws of free market supply and demand, setting their own prices, inhibiting innovation and product development and passing off inferior goods.
Healthy competition in industry helps deliver to consumers, better choice and fairer pricing.
Simon Bishop, a competition expert at RBB Economics, says: "The key issue is why do we have competition rules: it's primarily because we think competition is a good thing, it delivers low prices and the products that end-consumers want."
He adds: "If you get one firm that does not face effective competition from its rival in a particular area then it can put up its prices, it doesn't need to innovate as much so consumers pay higher prices for lower quality products."
Which are the main competition authorities?
US – The duty of regulating mergers and acquisitions and other considerations of market dominance in the US is shared by the Federal Trade Commission and the Department of Justice.
The FTC declares its mission to be the "prevention of anticompetitive, deceptive, and unfair business practices, enhancing informed consumer choice and public understanding of the competitive process, and accomplishing this without unduly burdening legitimate business activity".
Eurozone – The European Commission is the main executive body of the European Union and promotes its general interest.
Its competition division's main objective is to "enhance consumer welfare and efficiently functioning markets by protecting competition".
UK - The Competition and Markets Authority is the regulatory body that replaced the Competition Commission in 2014, which itself was the replacement body for the Monopolies and Mergers Commission which ran between 1973-1999.
The CMA works to "promote competition for the benefit of consumers and aims to make markets work well for consumers businesses and the economy".