The Vast Space in Which the Vertical Merger Guidelines Lived

• DOI: http://doi.org/10.1177/0003603X221103114
• Published date: 01 September 2022
• Date: 01 September 2022

https://doi.org/10.1177/0003603X221103114

The Antitrust Bulletin

2022, Vol. 67(3) 424 –433

© The Author(s) 2022

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DOI: 10.1177/0003603X221103114

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Article

The Vast Space in Which the

Vertical Merger Guidelines Lived

Edward A. Snyder*

Abstract

The thesis of this article is that the gap left by the abandoned Vertical Merger Guidelines (VMGs)

is small, and that the gap should not be filled until a sound foundation for guidelines is built.

The VMGs operated with a narrow scaffolding in a vast space of real-world decisions and a

continuum of organizational forms. The illustrations in the VMGs were based on pricing models

that show that anticompetitive exclusion may result from vertical mergers. But these models

are incapable of generalization, and they do not account for investments, market uncertainty,

contracting problems, information asymmetries, and governance issues. Perplexingly, the VMGs

ignored research that considers such factors and illuminates a broad range of empirically verifiable

efficiencies. The requisite foundation for effective vertical guidelines is not in place. Until it is

developed, replacements will fail to screen vertical mergers that do not raise concerns and will not

be of assistance when mergers are challenged. Antitrust scholars could advance the foundational

work by developing authoritative briefs on topics such as anticompetitive exclusion, asset-specific

investments, incomplete contracts and opportunistic behavior, information asymmetries and

principal–agent problems, the purposes and effects of restrictive contracts, and the implications

of network economies for the scope of firms.

Keywords

vertical merger guidelines, vertical integration

I. Introduction

Important questions follow from the decisions by the Federal Trade Commission (FTC) and the

Department of Justice (DOJ) to abandon the Vertical Merger Guidelines (VMGs)1: How much of a void

is left? Should the VMGs be replaced? These questions should be answered bearing in mind that useful

*Yale University, New Haven, CT, USA

Corresponding Author:

Edward A. Snyder, Yale University, New Haven, CT 06520, USA.

Email: tsnyder@yale.edu

1103114ABXXXX10.1177/0003603X221103114The Antitrust BulletinSnyder

research-article2022

1. The DOJ and FTC adopted the 2020 Vertical Merger Guidelines on June 30, 2020. These superseded the portions of the

1984 Merger Guidelines that dealt with vertical mergers. See Department of Justice and Federal Trade Commission (2020).

The FTC and the DOJ withdrew the VMGs in the second half of 2021. Various forms of guidelines for vertical mergers and

vertical restraints have been in place since 1968.