feb 14, 1900 - Effectiveness of Antitrust Laws on Merger Guidelines

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Horizontal mergers are most frequently challenged, vertical mergers are sometimes challenged, and conglomerate mergers are generally permitted.

Section 7 of the Clayton Act is used by the government to block horizontal mergers that will substantially lessen competition. Factors are considered like economies of scale, the degree of foreign competition, and the ease of entry of new firms. Vertical mergers usually escape antitrust prosecution because they do not lessen competition in either of the two markets. However, a vertical merger between large firms in highly concentrated industries may be challenged. Conglomerate mergers are generally allowed because neither firm would increase their own market share, which would allow the Herfindahl index to remain unchanged.

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