Between Absolute And Amorphous: The Draft Guidance On Vertical Mergers: Commentary On The Draft 2020 Guidelines

Businesses at different levels in the supply chain of a product choose to merge (“vertical mergers,” compared with “horizontal mergers” where businesses at the same level in the supply chain merge) for a variety of reasons, many of which can be beneficial to competition and/or consumers. Vertical mergers can lead to efficiencies in supply chains, eliminations of multiple profit margins, and elimination of markups. These efficiencies can be why vertical mergers are not often challenged by the Department of Justice or Federal Trade Commission (the “Agencies”). However, as our economy becomes more integrated and several companies expand outside of their original business models (Amazon’s purchasing Whole Foods, for example), regulators are expressing greater concern about the anticompetitive effect of vertical mergers. In 2018, the government unsuccessfully challenged the merger between Time Warner, an entity that creates media content, and AT&T, a downstream entity