Vertical mergers are increasingly becoming a focus of attention, due to a number of recent high-profile cases in the technology, media and telecom (TMT) sector. Evidence suggests that vertical mergers are generally pro-competitive, as they are driven by efficiency-enhancing motives such as improving vertical co-ordination and realising economies of scope. However, in a few cases vertical mergers may indirectly harm competition, by increasing the risk of anti-competitive behaviour post-merger, such as foreclosure and horizontal collusion. Competition harm is potentially higher when foreclosure enables a vertically-integrated firm to create entry barriers, gain bargaining power or avoid market regulation, which could arguably occur within the TMT sector. This paper discusses the assessment of vertical mergers, bringing together insights from economic theory, empirical evidence and recent case law in the technology, media and telecom sector. It was prepared as a background note for a discussion held at the OECD in June 2019 on Vertical Mergers in the Technology, Media and Telecom Sector.
