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Antitrust policy and vertical mergers


  • Eric S. Rosengren
  • James W. Meehan, Jr.


Recently, federal regulators responsible for enforcing the antitrust laws have shown a renewed interest in the potential anticompetitive effects of vertical mergers--mergers between two independent firms in successive stages of production. This greater activism in vertical merger cases is in striking contrast to the permissive policies that prevailed throughout the 1980s, which, in turn, were a response to the Justice Department's and the Federal Trade Commission's open hostility to vertical mergers during the 1960s and 1970s.> The cyclical antitrust treatment of vertical mergers over the past three and one-half decades has been strongly influenced by the theoretical research of academic economists and lawyers. This article examines the empirical evidence of anticompetitive foreclosure in vertical mergers challenged by the Justice Department and the Federal Trade Commission during the period from 1963 to 1982. The authors find no evidence of anticompetitive market foreclosure for the sample of vertical merger cases challenged by the antitrust agencies during this period. They suggest that a more permissive policy towards vertical mergers be maintained until the theory can spell out more clearly the circumstances when vertical mergers result in anticompetitive foreclosure.

Suggested Citation

  • Eric S. Rosengren & James W. Meehan, Jr., 1995. "Antitrust policy and vertical mergers," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 27-38.
  • Handle: RePEc:fip:fedbne:y:1995:i:sep:p:27-38

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    References listed on IDEAS

    1. Kim B. Clark & Lawrence H. Summers, 1979. "Labor Market Dynamics and Unemployemnt: A Reconsideration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 10(1), pages 13-72.
    2. Blanchard, Olivier J, 1984. "The Lucas Critique and the Volcker Deflation," American Economic Review, American Economic Association, vol. 74(2), pages 211-215, May.
    3. George L. Perry, 1970. "Changing Labor Markets and Inflation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 1(3), pages 411-448.
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