M8D1 - Scenario BACKGROUND In this discussion you will...

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Scenario:BACKGROUNDIn this discussion, you will combine the content-specific knowledge you have acquired in this course to develop a premerger prospectus for circulation among the members of a firm’s Board of Directors. They will review this document prior to its use in premerger notification filings, which may trigger an FTC investigation. If the FTC believes that a firm has violated the law or that a proposed merger may violate the law, the agency may attempt to obtain voluntary compliance by entering into a consent order with the company. A company that signs a consent order need not admit that it violated the law, but it must agree to stop the disputed practices outlined in an accompanying complaint or take certain steps to resolve the anticompetitive aspects of its proposed merger. On the other hand, if a consent agreement cannot be reached, the FTC may issue an administrative complaint and/or seek injunctive relief in the federal courts.Assume that the craft wine market is composed of only eight firms, with each of these having a 12.5 percent market share. One of these eight firms intends to merge with a competitor that produces fruit-infused wines that are often compared to its own boutique line in industry publications. The first firm’s economists have estimated that the cross elasticity of demand for itscompetitor’s product, in relation to its own, is 3. The competing firm controls substantial vineyards and orchards, while the first firm does not. Each firm is in a strong financial position

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