Why do regulatory authorities prohibit cross-subsidisation between merged dominant and subsidiary entities?

💡 Explanation:

Regulatory bodies prohibit cross-subsidisation, particularly in cases involving a dominant market player, to prevent the entity from using profits from a less competitive/upstream market to fund unreasonably low (predatory) prices in a competitive/downstream market. This practice is a form of market abuse that forecloses competition, so prohibiting it ensures a level playing field and fair competition.