Monopoly Flashcards
1
Q
A monopoly that innovates and provides genuine improvements in its market (Astro TV introducing Astro Addressable Advertising)
A
- Made it more attractive for marketers as it combines TV’s emotional persuasive power by focusing on consumers’ income, location and purchasing behaviour
- This can scale to suit various industries and business sizes. This feature, for the first time, allowed small local enterprises to access TV inventory
- In Astro TV’s Astro Addressable Advertising, data-driven targeting and measurement capability to boost ad performance through audience data expansion allowed brands the opportunity to access a richer set of audience descriptors.
- Consumers also benefit as they enjoy a more personalised and relevant experience as they see ads that reflect their local community and lifestyle
2
Q
A monopoly abusing its power
A
- Standard Oil, founded by Rockefeller, controls 90% of oil refining in the USA
- Standard Oil sold oil below costs in certain regions to drive competitors out of business and raised prices once they had a monopoly.
- Standard Oil would make deals with railroads to only transport their oil thus, effectively shutting out competitors
- Standard Oil would buy up competitors as well as their assets to eliminate competition
3
Q
A case where a merger has been blocked by a government
A
- Competition and Markets Authority (CMA) blocking the merger between Sainsbury’s and Asda in the UK
- Sainsbury owns more than 1.4k shops in the UK while Asda only has more than 600
- The merger pledged to bring 1 billion pounds of price cuts for consumers if Sainsbury and Asda were to sell 150 of their supermarkets, petrol stations and convenience stores
- This will likely lead to higher prices in Sainsbury or longer checkout queues which would be unwelcome to shoppers
- Sainsbury would require large amounts of investment in stores and price cuts whilst also maintaining its payments to shareholders
- Led to Sainsbury’s shareholders to fall by 6%
- CMA realised that the merger would face serious obstacles in securing approval
