Determining the Competitive Effects of Vertical Integration in Mergers

A common focus of merger review is horizontal mergers, namely transactions bringing together two firms that compete directly for at least some sales. However, antitrust agencies also consider the potential anticompetitive effects of vertical mergers, namely transactions bringing together one firm that sells an input with a firm that uses the input in manufacturing its product. The firm selling the input is commonly referred to as the “upstream” firm and the firm using the input (also known as an intermediate good) to produce its own product is referred to as the “downstream” firm. The downstream firm may be producing a final good that is sold to consumers, but that does not have to be the case.