No, Arkane is not working on ESV at all.
I can't remember where, but I did read that Arkane would be providing advice and recommendations much like how the developers of idTech contributed to the Creation Engine. Arkane did the same thing during Bioshock 2's development, which was made by 2K Marin.
I think they are working on their own game at the moment.
Yeah, they are. I'd like to think it's a Dark Messiah-type game made with the creation engine (which has my friend happy - he's a huge Dark Messiah fan) though I think Ubisoft owns the rights to the Might and Magic franchise, which means it could only be a spiritual successor at best.
Maybe they are slowly buying out the competition and forming a monopoly?
Not a monopoly, but a company to compete with the likes of EA and Activision. Bethesda Softworks has come a looooooooong way after BGS released Oblivion. You can make money off of one successful publishing deal, but there is a lot more money to be made with more publishing deals. And by straight-out buying companies, you can make sure that the publishing goes through you. And fortunately for Bethesda, the companies they're grabbing have plenty of resources. Two new engines under the belt already.
Seeing as Arkane is merged with Bethesda now as one company, it wouldn't surprise me to know that they are working together. You probably wouldn't know it. I think the staff merged too, so the combat designers probably were integrated into Beth's staff. After all, they have almost double the staff working on Skyrim than they did on Oblivion. Some of Arkane might be among those numbers.
No, they didn't merge. It's a parent-child company structure. The companies remain companies and stay in whatever headquarters they are, but they are administered over by the parent company. http://i681.photobucket.com/albums/vv175/Proditus/ZeniMap2.jpg.