Reference no: EM133531788

Question

Waste Management Inc. (WMI), a company in the solid waste disposal business, acquired the stock of EMW Ventures Inc. EMW was a diversified holding company, one of whose subsidiaries was Waste Resources. WMI and Waste Resources each had subsidiaries operating in or near Dallas, Texas. The government challenged the merger on the theory that it violated § 7 of the Clayton Act. The trial court agreed. In finding a § 7 violation, the trial court defined the relevant market as including all forms of trash collection (except at single-family or multiple-family residences or small apartment complexes) in Dallas County plus a small fringe area. The combined WMI and Waste Resources subsidiaries had page 50-30a 48.8 percent share of the relevant market. The trial court held that this market share raised a presumption of illegality and that WMI had not rebutted the presumption. WMI appealed, arguing that new firms could easily enter the trash collection business in the relevant geographic area and that the trial court should have regarded this ease of entry as a sufficient rebuttal of the presumption of illegality. Was WMI correct?

Horizontal, vertical and conglomerate mergers can all have anti-competitive effects in the relevant market impacted by the merger, although the effects vary depending on the nature of the merger. Identify the type of merger that is taking place, the various anticompetitive effects of such a merger, and how the court will determine if the merger violates section 7 of the Clayton act.