Merger Case Write-Up: SAGASCO Holdings Assingment (Essay Sample)

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Case Write-up: SAGASCO Holdings

The single market is a representation of integration where goods and services move freely; geographic market involves segmenting market within geography such as regions. Looking at the Australian natural gas market, it can be described as a single geographic market. Different firms operated in different states and territories within the country. Santos managed production of gas in four states such as South Australia, New South Wales, Queensland and Northern Territory while the other territories are under different companies.

Distribution of the natural gas, SAGASCO a holding company owned and operated distribution in South Australia. States such as Victoria had a different gas distribution supplier. The gas produced move freely from the producers to the final consumer across the country through various distribution companies. Santos served four states while the gas from Cooper basin served South Australia Queensland and New South Wales.

The merger of Santos and SAGASCO would increase the market power. The merger will mean an increase in substation run by the merged companies leading to a wider territory under which it operates. The increase in the number of substations will make the gas demand fairly sensitive to gas prices as illustrated by the price elasticity of demand rule.

Regulators should ...