(80) See Michael Salinger, Vertical Mergers
and Market Foreclosure, 103 Q.
In addition to these cases, numerous other challenges brought by both agencies reveal their serious concern about potential market foreclosure by vertical mergers
. (33) In a case involving premium ice cream, the FTC required a spin-off of several brands in order to avoid a possible lessening of competition in the retail channel.
VERTICAL STRUCTURE: PRINCIPLES(29) In (otherwise) unregulated industries, vertical mergers
can lead to a distortion of competition, with consequent inefficiencies, at one level of production if there is some market power at the other; but they might bring scope economy benefits.
Greater discretion opens otherwise closed doors in which special interests can use antitrust processes to suit particular ends.(45) Even when the process is free of distorting political influences, one may doubt whether even well-intentioned enforcers will be able to tell when their actions will be productive, e.g., to be able to tell good vertical mergers
from bad ones absent clearly extenuating circumstances, such as price regulation.(46)
(26) See Salinger, Vertical Mergers
and Market Foreclosure, 77 Q.
In that sense, vertical mergers
displace the market as an arbiter of economic decision making.
proliferate in many markets with the promise of increasing business synergies to create more efficient operations.
However, vertical mergers
and alliances will increase retailers' presence in the delivery of health care services."
(Fortunately, in 2017 the Department of Justice stopped the Aetna-Humana and Anthem-Cigna proposed mergers because the merger would have left the country with only three large insurers.) But the real game-changers are 2018's "vertical mergers
," in which one entity owns multiple functions in the commercial healthcare stream.
Opposing the merger forced the DOJ to argue against standing legal doctrine that favors vertical mergers
among firms that don't compete directly against each other.