vertical merger

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Related to Vertical Mergers: Horizontal merger, Conglomerate Mergers

Vertical merger

When one firm acquires another firm that is in the same industry but at another stage in the production cycle. For example, the firm being acquired serves as a supplier to the firm doing the acquiring.

Vertical Merger

A merger between two companies in the same industry but at different stages of the production cycle. A vertical merger can reduce the costs of the two companies by eliminating redundant processes. It also reduces reliance of one company on another. For example, an upstream oil company can merge with a downstream oil company to streamline operations.

vertical merger

A merger between two firms involved in the same business but on different levels. As an example, an automobile company may purchase a tire manufacturer or a glass company. The merger permits the firm to gain more control of another level of the manufacturing or selling process within that single industry. Compare horizontal merger.

vertical merger

A merger between companies that supply different goods or services but in a common industry.

References in periodicals archive ?
That's a view shared by many progressive media critics, including an influential group of young antitrust professors who have been calling for stricter review of vertical mergers, especially in media and entertainment.
The law-study also explains why it will usually be inherently profitable for a vertically-integrated firm to charge independent customers per-unit prices that exceed the marginal cost the integrated firm must incur to supply them while instructing its downmarket divisions to base their decisions on the assumption that the cost to them of the inputs/final products the firm's upstream division supplies them equals their marginal cost to the upstream division (92) and why most vertical mergers that create firms that disadvantage independents in this way do not violate the specific-anticompetitive-intent test of illegality.
A significant obstacle to the study of vertical mergers had been the identification of vertically related transactions.
Lubatkin (1983) suggests that vertical mergers will most likely benefit from the schedule economies where two levels of production at two stages of a value chain are merged.
The fourth section analyzes horizontal and vertical mergers.
Prior to the mid 1970s, the Supreme Court's antitrust legal decisions with respect to vertical restrictions and vertical mergers were consistent with the harsh "Harvard" view.
Development of prediction models for horizontal and vertical mergers.
On the Patterns and Wealth Effects of Vertical Mergers, Journal of Business, 79, 2, 2006, pp.
With the recent antitrust trial pitting the Department of Justice against Microsoft, the Telecommunications Act of 1996, which set guidelines for local exchange carrier entry into long-distance telephony, and the many recent high-profile vertical mergers (e.
Therefore, there is a need for scrutiny of vertical mergers even in the absence of market power.
For example, without incorporating the concept of "an equally or more efficient competitor," the test for vertical mergers focuses on the defendant's intent, (52) and the analysis for exclusionary practices that also offer efficiencies (which is raised in the discussion of the new economy) looks to whether a practice is "employed widely in industries that resemble the monopolist' s but are competitive.
But with the proliferation of vertical mergers and the blurring of industry lines, the FTC and DOJ began fighting for jurisdiction, leading to review delays for the companies in question.