two firms of similar sizes combine to become one. However, both mergers and acquisitions lead to two

formerly separate firms operating under common ownership, and so they are commonly grouped together.

Regulations for Approving Mergers

Since a merger combines two firms into one, it can reduce the extent of competition between firms. Therefore,

when two U.S. firms announce a merger or acquisition where at least one of the firms is above a minimum size

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11.1 • Corporate Mergers 261

of sales (a threshold that moves up gradually over time, and was at $101 million in 2022), or certain other

conditions are met, they are required under law to notify the U.S. Federal Trade Commission (FTC). The left-

hand panel of Figure 11.2 (a) shows the number of mergers submitted for review to the FTC each year from

1999 to 2012. Mergers follow the business cycle, falling after the 2001 recession, peaking in 2007 as the Great
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