Definition
Horizontal effects are the anti-competitive consequences of mergers where the competitive constraints existing before the transaction between the merging parties are eliminated (unilateral or non-coordinated effects), and/or the post-merger market structure reduces the intensity of competition between the remaining competitors (pro-collusive or coordinated effects).
Horizontal Effects
Non-coordinated effects refer to a situation where, post-merger, the merging parties are able to profitably increase prices, reduce output, or otherwise act less competitively than before, while their rivals do notalter their strategies. Non-coordinated effects arise from the independent profit maximization of the individual firms and are due to the internalization of competition between the merging firms. Before the merger, a unilateral price increase by one party would have led to sales lost to competing firms, including the other merging party. As a result of the merger, the parties can...
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References
European Commission (2004) Guidelines on the assessment of horizontal mergers under the council regulation on the control of concentrations between undertakings. OJ C31/5. Available from: http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52004XC0205(02)&from=EN. Accessed 10 June 2017
U.S. Department of Justice (2010) Horizontal merger guidelines (Issued August 19, 2010). Available from: http://www.ftc.gov/sites/default/files/attachments/merger-review/100819hmg.pdf. Accessed 10 June 2017
Further Reading
Bishop S, Walker M (2009) The economics of EC competition law: concepts, application and measurement, 3rd edn. Sweet and Maxwell, London
Hildebrand D (2009) The role of economic analysis in the EC competition rules, 3rd edn. Kluwer Law International, New York
Kirschner US (2007) European competition policy – assessment problems in merger control. VDM Verlag Dr. Müller, Saarbrücken
Kühn KU (2008) The coordinated effects of mergers. In: Buccirossi P (ed) Handbook of antitrust economics. The MIT Press, Cambridge, MA, pp 105–144
Motta M (2004) Competition policy – theory and practice. Cambridge University Press, Cambridge
Schwalbe U, Zimmer D (2009) Law and economics in European merger control. Oxford University Press, Oxford/New York
Werden G, Froeb LM (2008) Unilateral competitive effects of horizontal mergers. In: Buccirossi P (ed) The handbook of antitrust. The MIT Press, Cambridge, MA, pp 43–104
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Schumacher, P. (2019). Horizontal Effects. In: Marciano, A., Ramello, G.B. (eds) Encyclopedia of Law and Economics. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-7753-2_235
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