General Education Development (GED) Practice Exam

Corporation X wants to purchase Corporation Y, the only other oil refiner in the U.S. Why might this raise a concern for the government?

1. It may violate environmental laws

2. It may constitute a violation of antitrust laws

3. It could violate labor laws by reducing employees' choices

4. It could constitute a pyramid scheme

The correct answer is: It may constitute a violation of antitrust laws

The concern that the government may have regarding Corporation X's purchase of Corporation Y primarily revolves around antitrust laws. These laws are designed to promote competition and prevent monopolies in the marketplace. If Corporation X acquires Corporation Y, this could lead to the creation of a monopolistic structure in the oil refining industry, given that Corporation Y is the only other oil refiner in the U.S. The acquisition would essentially eliminate competition, allowing Corporation X to control pricing and potentially stifle innovation within the industry. By concentrating market power in the hands of a single entity, consumers may face higher prices and fewer choices. Governments aim to prevent such situations to maintain fair competition and protect consumer interests, which is why a merger of this nature would raise significant regulatory scrutiny under antitrust laws.