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A conglomerate is a firm or business enterprise having different economic activities in different unrelated industries. Conglomerate firms may emerge through mergers and acquisitions and/or investments across a diverse range of industries for a variety of reasons such as minimization of risk, increased access to financial and management resources, and more efficient allocation of resources.

Competition policy concerns have been raised, although without universal agreement among economists, that conglomerates facilitate anticompetitive practices through cross-subsidization of less profitable activities aimed at driving out competition and reciprocal arrangements with other conglomerates in the purchase and sale of inputs-outputs. There is increasing evidence that conglomerates are not necessarily more profitable and many conglomerate firms have in recent times been divesting different activities and focusing their operations on fewer lines of business.

Source Publication:
Glossary of Industrial Organisation Economics and Competition Law, compiled by R. S. Khemani and D. M. Shapiro, commissioned by the Directorate for Financial, Fiscal and Enterprise Affairs, OECD, 1993.

Cross References:
Conglomerate merger


Statistical Theme: Financial statistics

Created on Thursday, January 3, 2002

Last updated on Monday, April 15, 2013