GE and the Honeywell. Argument For And Against The Commission Decision Essay

GE and the Honeywell. Argument For And Against The Commission Decision - Essay Example According to Pfanz (2001), the categories of bundling might have included pure and mixed. Indeed, as the paper progresses it would be simpler to deduce the category. The Commission suggested that the bundling technique would have many pleasant effects on the merged GE and Honeywell’s competitors in the markets for aerospace equipment and jet engines. This is because the rivals’ market shares would be eroded by their incapability to compete with the joined entity package deals, which in turn would lower the profitability of their rivals leading to their exit (Schlossberg & American Bar Association. Section of Antitrust Law 2008, p. 17). The Commission thought that the ability of the company to employ bundling would enable the combined corporate to offer complimentary goods at a reduced price compared to when the products are sold separately. The Commission suggested that bundling would lower the revenues for the GE’s and Honey well’s Competitors in the market. The reduction of revenues would be advantageous to the companies since it would reduce their competitors’ ability to invest. Moreover, it would augment the companies’ capabilities of competing effectively. According to the Commission’s view, the prices could rise in future, and this would cause harm to their rivals and customers in the market. From the Commission’s presentation, bundling would have an ultimate effect of shutting out markets for the competitors who deals with single line of products. Such foreclose would help in the decrease of investments by other competitors or even eliminate them. The Commission pre dicted that the combined business would have incentives by bundling its companies’ products. This would make its competitors to be less competitive by depriving then revenues. This implies that the firms that have been deprived their revenues would not cover their fixed cost. He argued that this would be advantageous to the EG and Honeywell, since it would have unpleasant effects on their competitors spending and thus they would not compete effectively in future. In his argument, the Commission proved his points by providing proof that Honeywell uses bundling in strategic way called â€Å"multi-product† bids. Moreover, the Commission got evidence from the companies’ competitors proving that they faced Honeywell bundling, which made it difficult for them to compete. Therefore, the Commission said that if bundling were to continue, their rivals would withdraw particularly the Rockwell Collins Company