ANTITRUST POLICY AND VERTICAL MERGERS

Recently, federal regulators responsible for enforcing the antitrust l aws have shown a renewed interest in the potential anticompetitive eff ects of vertical mergers-mergers between two independent firms in succ essive stages of production. This greater activism in vertical merger cases is in striking contrast to the permissive policies that prevaile d throughout the 1980s, which, in turn, were a response to the Justice Department's and the Federal Trade Commission's open hostility to ver tical mergers during the 1960s and 1970s. The cyclical antitrust treat ment of vertical mergers over the past three and one-half decades has been strongly influenced by the theoretical research of academic econo mists and lawyers. This article examines the empirical evidence of ant icompetitive foreclosure in vertical mergers challenged by the Justice Department and the Federal Trade Commission during the period from 19 63 to 1982. The authors find no evidence of anticompetitive market for eclosure for the sample of vertical merger cases challenged by the ant itrust agencies during this period. They suggest that a more permissiv e policy towards vertical mergers be maintained until the theory can s pell out more clearly the circumstances when vertical mergers result i n anticompetitive foreclosure.