Why are horizontal mergers more likely to be opposed than vertical and conglomerate mergers?
What will be an ideal response?
A horizontal merger merges two firms in the same geographical market, reducing the number of independent firms in an industry. This kind of merger has a potential to significantly decrease competition in the industry and thus is the most watched of the three main kinds of mergers.
A vertical merger has less potential to decrease competition because it merges two separate industries. Even though this combines firms that are at different stages of the same production of a product, it doesn’t actually reduce the number of firms in each of the merged markets and thus competition is not significantly reduced. The same is true for conglomerate mergers, which merge firms in two unrelated industries. The number of firms in each industry remains the same, so competition remains relatively unchanged. Thus, the government is less concerned with these two kinds of mergers.