Horizontal Merger Meaning
A horizontal merger refers to a business consolidation between two companies operating in the same industry and at the same level of production or supply chain. The purpose is to combine two competitors or businesses that offer the same products or services.
Typically, horizontal mergers are designed to increase market share, reduce competition, or gain a competitive edge. The companies will benefit from pooling their resources, sharing expertise, reducing costs, and possibly increasing their market share by merging.
A horizontal merger must be closely monitored by regulatory authorities, including antitrust or competition commissions, to make sure it does not result in anti-competitive behavior or harms consumers. The regulatory authorities may challenge or even block a horizontal merger if it decreases market competition significantly in order to prevent monopolies.
Generally, a horizontal merger involves two companies operating in the same industry merging their operations and resources to achieve various business objectives and potentially gain a stronger market position.