The Hindu Business Line : Merging companies

This is with reference to the editorial "Beware of mergers" (Business Line, August 25). As rightly pointed out in the editorial, the proposal to merge India's giant petroleum companies into megalithic corporations should be carried out only after much thought has been given to it.

Mergers do not work in an open economy where there is a need for competition. By merging companies, the number of competitors is reduced and this, in turn, affects the market.

Further, as pointed out in the editorial, the different work cultures and leadership styles that each company has makes it difficult for such mergers to be smooth.

However, the biggest fear is that such mergers may establish monopolistic organisations, which have complete control of the pricing in a market.

The concentration of power in any one organisation will also prevent other players from entering the market. One hopes that the Government does a rethink on the proposal to merge markets.

Karthick. N

Chennai

Letters to the editor and contributions can be sent by e-mail to: bleditor@thehindu.co.in

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