Impact upon the Merger Case between BRITIVIC and AG Barr Essay

Impact upon the Merger Case between BRITIVIC and AG Barr - Essay Example The main aim of this article is to analyze the case of the merger of Britvic as a strategy to compete with Coca-Cola and the various issues that arose post-merger. In the UK, carbonated soft drink market can be identified as tight oligopolistic market structure according to Shepherd’s classification of markets but majority dominated by Coca-Cola with a 57% market. Britvic is one of Coca Cola’s rival in a position of the second biggest but only with 14% market share. Faced with the much stronger market position of Coke Cola Company, in 2013, Britvic announced the intention to merge with AG Barr, which has the third biggest market share by 4%, as one way of acquiring enough strength to compete with the Soft Drinks Giant. In response, the Office of Fair Trade announced the need to make a thorough competition analysis for the two companies to identify the possible impacts of the merger in the market. The merger between is a typical horizontals merger as both companies produce the homogenous product. According to Britvic, a merger will help the company to gain enough ground to compete with Coca-Cola which would reduce their dominance because horizontal integration in the industry would have the significant impact upon changing of the market structure. If the monopoly effect in the industry can be declined due to two small market share equipped companies combined to compete against the dominant company, the consumers will have a higher bargaining power and may have the opportunity of purchasing soft drinks at a cheaper price. However, the Office of Fair Trade identifies that the merger will result in the formation of two giants, which will reduce completion and the risk of hiked prices after the merger.