Acquisitions, market share and interest groups

Gaining greater market share and using it to maximise profits is a winning strategy for companies. One of the best ways to gain greater market share is to acquire another firm in the same industry (horizontal acquisition). In many cases, this type of merger and acquisition is problematic because of antitrust laws. In this paper we present a political economy model that shows how a firm could legally bypass antitrust issues by using interest groups. We illustrate the model using a case study from the retail food industry in Israel.