Mergers and acquisitions are common in the utility and telecommunications industries. Mergers of competitors or related companies could increase their market power and reduce competition. As a result, they require approval from both state and federal regulators. Regulators determine whether a proposed merger would make it difficult for new competitors to enter the market or might otherwise harm consumers, such as through higher prices. They evaluate if it would allow the newly formed company to engage in marketing and pricing practices that could disadvantage consumers. They also look at whether the merger would make it difficult to regulate the industry.
MERGERS AND ACQUISITIONS: Policy
Utility company mergers
- only approve mergers that demonstrate net long-term, enduring, and sustainable consumer benefits;
- prohibit mergers that threaten regulatory protections for residential ratepayers, reduce market competition, do not increase economic efficiency, or may lead to residential rate increases; and
- ensure that ratepayers do not bear the costs and risks of utility mergers or takeovers.