This article explores the tools that can be most effective for the agencies to analyze vertical mergers.
The DOJ and FTC have lost a series of vertical merger cases over the past several years. One possible reason for these losses is the government’s strategy; specifically, that there has been too much focus on the often technical details of models such as raising rivals’ costs that have become standardized tools of vertical analysis. These tools can lead to an overly narrow way of viewing harms and a tendency to discount efficiencies in vertical mergers.
As the economics literature has shown, vertical mergers can lead to a wide range of outcomes that can be difficult to translate into a simple analytical framework. The best way to identify the most likely possibilities (both pro- and anticompetitive) from this wide range of outcomes may be to start with predictions of industry participants, then to build evidence around the economic theories that are consistent with these predictions. In this article, authors Bob Majure and Andrew Sfekas discuss that although this approach would require greater engagement with the efficiencies of vertical mergers, it would empower the agencies to do so with a more compelling alternate theory instead of a technical model and stay truer to the economic literature’s teaching of what all can follow from a vertical merger.
This article was originally published by Competition Policy International’s Antitrust Chronicle in June 2025.
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