February 2008 -- (Presentation) Overview: Brief description of primary vertical theories of potential competitive concern from a merger. Input foreclosure. Customer foreclosure. Elements for a vertical theory to be plausible. Ability to foreclose. Incentive to foreclose. Foreclosure is likely to harm competition. Efficiencies do not offset. Evidence related to each element.
Vertical Theories: As noted by the EU in their draft Guidelines, the two main theories of competitive harm related to vertical mergers are. Input foreclosure (upstream). Customer foreclosure (downstream). Input foreclosure: Firms with large upstream positions deny access to or increase of a key input to rival downstream firms, restricting competition downstream. Customer foreclosure: Firms with large downstream positions do not purchase key inputs from rival upstream firms, restricting competition upstream.
Citation
"Nice Theory, But Where's the Evidence?: The Use of Economic Evidence to Evaluate Vertical and Conglomerate Mergers in the U.S. and E.U." by Mary T. Coleman (Feb. 1 2008), Quick Links: Merger Analysis in High Tech Markets Conference
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