Vertical mergers are increasingly becoming a focus of attention in the antitrust sphere, due to a number of recent concentration operations among large vertically related companies in the technology, media and telecom industries. While traditionally presumed as pro-competitive, vertical mergers may sometimes pose indirect harm to competition, with common theories of harm including exclusionary strategies through input and customer foreclosure, attempts to leverage market power via price discrimination and facilitation of tacit co-ordination. These competition concerns are often counter balanced by important efficiency effects, which include the elimination of the double-marginalisation problem, reduction of transaction costs, and creation of incentives for investment and innovation.
In June 2019, the OECD Competition Committee discussed how competition authorities can effectively use merger control to reduce the risk of competition harm posed by potentially problematic vertical mergers, without compromising the many efficiencies typically associated with vertical integration. Building on the 2007 OECD work on the same topic, the background note revisits the assessment of vertical mergers in light of recent developments in economic theory and the new insights brought by recent merger cases.
Margaret SLADE Bio
Carl SHAPIRO Bio
Christopher YOO Bio
Testing vertical mergers for input foreclosure by Carl Shapiro