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CS Professional · Corporate Restructuring, Valuation and Insolvency · Regulation of Combinations

In an inquiry into whether Sagar Telecom Ltd holds a dominant position, the Commission notes that large corporate buyers can negotiate strongly and switch easily among suppliers, limiting Sagar's pricing power. Which factor in the provided section 19(4) does this observation relate to?

The observation relates to countervailing buying power, a factor listed for judging dominant position. Powerful buyers who can negotiate or switch suppliers restrict the seller's market power. Dependence of consumers would instead suggest buyers lack alternatives, which is the opposite.

  1. ACountervailing buying powerCorrect
  2. BVertical integration of the enterprises
  3. CSocial obligations and social costs
  4. DDependence of consumers on the enterprise

Explanation

Strong buyers who can constrain a supplier's pricing reflect countervailing buying power, listed in section 19(4)(i). Dependence of consumers points the opposite way, since it describes consumers lacking alternatives.

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