What is concentrated market

concentration

Concentration of economic and possibly also political power z. B. through company acquisitions and group formation (group), can lead to monopoly (monopoly) of markets and the restriction of entrepreneurial freedom of choice. The state operates in order to maintain functioning competition and to prevent concentrations

Concentration is the amalgamation of noble undertakings. In particular, concentration occurs through merging or amalgamation. In addition, concentration is also possible through grouping and in some cases through cartelization.

is the name given to the mergers of companies into corporations or the pooling of capital among individuals and families. The process of concentration began in high capitalism (capitalism) and led to parts of the theory of Marxism. Increasing concentration often leads to a higher number of monopolies and oligopolies (market forms). Advantages: possibilities of rationalization; better conditions for financing; higher counterbalance to trading power. Disadvantages: Too large corporations become sluggish in their reactions to changed market conditions (market); complex and expensive • organization required; Due to a stronger position of power, sometimes a reduction in competition, price advantages are not always passed on to customers. In addition to the group, the results of the concentration are e.g. cartel, IG (interest group), syndicate, trust. The concentration is subject to control by the cartel authorities because of its possible threat to competition (Section 24 GWB).

Based on the etymological origin of the word concentration, this term is generally associated with collecting, uniting and condensing any elements around a center. Concentration can be interpreted on the one hand as a state (= state of compression) and on the other hand as a process (= compression process). In relation to company concentration, it is a comparison of individual company sizes over time, although it is debatable which measures (e.g. sales revenue, added value) most closely reflect the size of a company and its positive change (= company growth). From the multitude of possible definitions, z. B. Best as concentration a "disproportional company growth", and Vogel speaks of a "stronger growth of the higher company size classes compared to the respective lower size classes".

In the health industry:

In the economy the agglomeration of economic size. The concentration process is often used to describe the acquisition of a company by another company. The process of concentration is often accompanied by a restriction of competition.

Such restrictions of competition through concentration processes are only permissible to a certain extent according to the legal system. The Act against Restraints of Competition (GWB) prohibits the abusive exploitation of a dominant position by one or more companies. Section 19 (3) of the GWB states for the determination of market dominance:

A company is presumed to be dominant if it has a market share of at least one third. A group of companies is considered to be dominant if it 1. consists of three or fewer companies that together achieve a market share of 50 percent, or 2. consists of five or fewer companies that together achieve a market share of two thirds, be it because the companies demonstrate that the competitive conditions between them allow significant competition to be expected or that the entirety of the companies does not have a superior market position in relation to the other competitors.


The Federal Cartel Office is responsible for monitoring the concentration and preventing restraints of competition. For some time it has also been critically reviewing the concentration process on the hospital market as part of merger control.

Concentration can be defined at different levels. On the one hand, it characterizes development processes:

- Company growth through the amalgamation of companies of the same or different levels (growth strategies)

- Growth of large companies through stronger sales development compared to the competition

- Elimination of competitors from the market, e.g. through displacement.

On the other hand, the concentration relates to the time-related number and size distribution of companies in an industry or sector as a result of this development process.

The degree of concentration is expressed by the degree of concentration. It is defined as the percentage of sales made by the x-largest (x = 1, 2, ...) companies in a sector in the total sales of this sector.

1. Not uniform. use Bez. General: State of affairs in an economy that is characterized by strong to excessive concentration of economic power. The economies of the industrialized countries are characterized by more or less strong concentration. It can be given horizontally and / or (mostly) also vertically. Predominantly horizontal concentration as such within the same or closely related sectors is given in the banking and financial services sectors.
2. Bank concentration in the euro area, concentration (consolidation) in banking.
3. Concentration (consolidation) in the financial services sector.
4. agglomeration, accumulation, z. B. Bad risks in a bank's loan or securities portfolio.

from an etymological point of view, the grouping of some elements around a center. If this general definition is transferred to economic facts, concentration can be interpreted as a compression of economic categories or an agglomeration of economic variables. Concentration can be interpreted as a condition (compression status) on the one hand, and as a process (compression process) on the other. Concentration is not defined uniformly. The criterion of so-called disproportionate company growth is often used, i.e. some companies grow disproportionately, others disproportionately, while other companies shrink or even die. If the definition of the term is based on disproportionate company growth, concentration is understood exclusively as a process (company concentration). How concentration is to be recorded in detail is the subject of the concentration measurement. Literature: Schubert, W./Küting, K., Entrepreneurial Mergers, Munich 1981, pp. 55 ff.

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