A significant obstacle to the study of vertical mergers had been the identification of vertically related transactions.
Indeed, we find that vertical mergers are detrimental to competitors of the target, as well as of the acquirer firms.
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
72) One can imagine a case, for example, in which the search for the defendant's intent--needed for Judge Posner's tests on vertical mergers
(73) and predatory pricing (74)--will encompass an array of witnesses and documentary evidence that go to the "issues in dispute.
In the market approach, vertical mergers
are viewed as an instrument to harm competition by denying competitors the access to either a supplier or a buyer of input (foreclosure).
Even though the antitrust agencies have paid relatively little attention to vertical mergers
or potential competition in recent years, we think the DOJ must carefully scrutinize these arguments," said AAI President Albert Foer.
This policy changed when critics of the foreclosure theory claimed that vertically integrated firms have no incentive to transfer products between the upstream and downstream markets at a price other than the market price and, therefore, vertical mergers
have no effect on the price charged to consumers.
These interaction terms are SIZ*CON and SIZ*VERT, where SIZ is the total asset value of the acquiring firm, CON is a dummy variable for conglomerate mergers, and VEnT is a dummy variable for vertical mergers
The 2008 edition includes articles focusing on M&A in different sectors including metals & mining, and food and agriculture, plus in-depth articles look at EC merger control of vertical mergers
, and UK tax reform among others.
The Chicago School prompts us to ask a set of simple questions about the incentives, gain and harm of vertical mergers
and refusals to sell.
Although firms have a variety of motives for vertical merger
and other vertical restrictions, a traditional issue, which permeates much of the literature on vertical integration, is how the existence of horizontal market power in one or more vertically-related industries creates motives for them to vertically integrate [13, 187-89].