A concern (German: Konzern) is a type of business group common in Europe, particularly in Germany. It results from the merger of several legally independent companies into a single economic entity under unified management. These associated companies are called "Group" companies.
Outside of professionals, the term Group, also mistakenly within the meaning of large companies – regardless of its corporate structure – is understood.
The Group concept is one of anti-trust relevance: the so-called Group privilege, the privilege of the consolidated Group companies involved, means that in itself, prohibition included practices did not violate German or European Commission (EC) anti-trust law. On the other hand, the Group concept in Banking Act in the formation of borrower unit and particularly of the large credit limits of paramount importance.
Types of Group
The German Stock Corporation Act defines the Group as follows: "If one dominant and one or more dependent companies under the unified leadership of the ruling company together, they form a Group and the individual companies are affiliated companies" (Section 18).
The key essence of the Group is the summary of legally independent companies under a single management. The single line is a vague legal concept, in which the legislators are aware of a specific waived. After the prevailing opinion is the single line if a company other company actually controlled. After the position of Group companies the law further differentiates between flat groups and hierarchical groups.
Characteristic of equal Atomic Group is the equal status of the Group. There is, in this case, no dominant companies, but the governing bodies are in a mutual adjustment contract. This may take the form of an advisory board or a human interdependence of the management of participating companies.
In practice more often is the form of a hierarchical Group. Here the companies are dependent under the direction of a single dominant company. A dependence of the subordinate enterprises occurs when the dominant companies to directly or indirectly exert a dominant influence, although this power must not be exercised, but it is sufficient if only the opportunity to do so.
There are three other forms of hierarchical groups, each with varying degree of integration:
Integration is the most intense form of the Group. It occurs when a corporation to another domestic 'Aktiengesellschaft' (AG) is taken. The integrated company maintains its independence at the outside, but internally acts as an operating division. Requirement is a majority-owned by at least 95%. In economic terms, the inclusion of a merger, or merger very close.
A contractor will be consolidated by a controlling agreement Sid Section 291 founded. A controlling agreement entitles the dominant company, the chairman of the dependent company with regard to the management of the company to issue. This deposit law is comprehensive and is thus detrimental for instructions, unless they contradict the consolidated interest or constitutes a threat to the existence dependent companies dare. Precondition for the conclusion of the contract is a three-quarter majority in the General Assembly of both companies. The comprehensive legal remittance companies obtained the legal ruling the full management of the business dependent society.
If neither control nor a contract inclusion, we speak under the following conditions of a proper group: There is a dependency ratio meaning of Section 17, the dependent company is a corporation (AG, Inc, Ltd., a corresponding application of section 17 on partnerships is already there because of the prevailing principle of unanimous decision-making on basic business management measures hardly possible) and the dominant company has the possibility to influence the dependent companies. Basis for the influence of the dominant company in principle constitutes a majority stake, which means the capital and / or majority. This influence may however not be used, the dependent society to a negative business for them to comply unless the disadvantages are balanced. This disadvantage, however, is compensatory in practice both the nature and the extent to difficult.
Business Group forms
Another distinctive feature of the different structure groups. There are many types of these weird and small business group that form.
As a Group called vertical corporations, the upstream and downstream stages of the actual value and power generation include a broad spectrum of the service providing cover themselves and not by outside companies. Example would be a corporate group European Coal and Steel Community, both coal and iron ore and steel degrades produced and possibly also marketed.
However, this Group now form part outdated – it is in modern economic often seen as uneconomical. Materials for processing, supply parts to produce is no longer itself, but buys them in changing suppliers about the best prices. Example of this form of production, Lean Production would be companies in the automotive industry, such as Volkswagen Group.
(inorganic groups) The conglomerate consists of enterprises in different areas. The individual companies have limited business relationships with each other. As multi-national corporations are also those groups designated locations in several states.
Criticism of corporations
The result of the merger often emerging political power of (wholesale) companies has been criticised for their formation. The critics can be divided into three groups:
- Politicians: Political criticism about the group size are reflected in the European Union competition law and anti-trust laws.
- The Church: The Church's criticism comes as a rule of the Christian (Catholic, Protestant or Orthodox) social teaching (or corporate ethics).
- Society: Social criticism can be found since the formation of the labour movement, especially in the currents of Social democracy and Marxism.
Since the emergence of New Social Movements, corporations have also become the focus of movements such as the Environmental movement and the Anti-globalization movement (see Black Book brand companies).
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