What Is a Horizontal Merger?

Horizontal merger refers to the merger of two or more enterprises with the same or close production processes, products, and services in the same industry. For example, an automobile manufacturing company has acquired another one or more automobile manufacturing companies, a passenger automobile company has acquired another one or several passenger automobile companies, and so on, all of which belong to this merger. The horizontal merger occurred for the following purposes: to make full and effective use of existing production equipment and production technology, improve product quality, improve variety structure, increase market share and competitiveness; through strong alliances, strong and weak alliances in the same industry Realize complementary advantages, improve management level and production capacity to get out of the trough and overcome economic difficulties; combine several small-scale enterprises to form a larger enterprise, which can achieve economies of scale and benefit from economies of scale. As horizontal mergers reduce the number of companies in an industry, thereby weakening competition among enterprises and increasing the monopoly power of merged enterprises, it is subject to government regulation in some countries. ^[1]

Horizontal merger

In some countries with highly developed market economies, governments often have antitrust regulations in place to limit the spread of horizontal mergers.

Antitrust law

In 2003, with the establishment of the State-owned Assets Supervision and Administration Commission, a new round of reform and reorganization of state-owned assets kicked off. The reform and adjustment of state-owned assets by the State-owned Assets Supervision and Administration Commission mainly followed two clues: first, the establishment of a modern enterprise system and the promotion of the group level Equity diversification and corporate transformation, including the introduction of foreign capital, private capital, and listing; second, the reorganization of assets and business systems, including horizontal mergers, highlighting main businesses, divesting auxiliary businesses, reducing and simplifying management levels.

On the other hand, what is more prominent is the cross-border international horizontal mergers and alliances of exchanges around the world. The performance is as follows: *) The integration of securities markets, such as the formation of IX, May 1999, London.

In 1997, Jacques Gansler, the newly appointed director of the Ministry of Defense s procurement department, formulated a new policy to oppose horizontal mergers that weaken competition, but to encourage mergers that can expand the market, that is, to allow companies to diversify into the market. Where possible, marry a distribution industry.

In the 1997 Guidelines for Horizontal Mergers of Enterprises, the Federal Trade Commission and the Antitrust Bureau of the Department of Justice stated that mergers can increase efficiency: through more effective use of existing assets, mergers have the potential to generate huge economic benefits, allowing the merged enterprises to produce For a given quantity and quality of products, it is possible to obtain a lower cost than any company without a proposed merger transaction, thereby creating higher efficiency.

In 1995, the International Cooperative Federation made adjustments and amendments to the principles of cooperatives in accordance with the development trend of horizontal mergers and vertical integration of a large number of cooperatives.

For example, in 1992, the United States Department of Justice and the Federal Trade Commission jointly issued the "1992 Horizontal Merger Guidelines," which focused on regulating horizontal mergers between enterprises.

The United States' 1992 Horizontal Mergers Guidelines also pointed out that when analyzing the potential anti-competitive effects of horizontal mergers, if companies producing similar products had a market share of at least 35% after the merger, companies would be able to increase their prices unilaterally while reducing production quantities.

In 1992, the U.S. Department of Justice and the Federal Trade Commission jointly issued a guide on horizontal mergers, which recognizes "reasonable mergers" but must allow "reasonable mergers" while preventing anti-competitive mergers.

The 1992 Horizontal Mergers Guidelines further clearly state that the authorities should consider whether potential market entry can promptly, possibly and adequately prevent or offset the anti-competitive effects of the merger. If companies entering the market can achieve such effects, the market will be easy It is impossible to create or strengthen or exercise market power in the market that has entered the merger.

In 1992, the Ministry of Justice and the Federal Trade Commission jointly issued guidelines for horizontal mergers of enterprises. Compared with 1982 and 1984, the most significant revisions of the 1992 horizontal merger guidelines were reflected in two aspects. The first is a clearer analysis. And explained which mergers have anti-competitive effects.

In 1992, the Ministry of Justice and the Federal Trade Commission jointly issued guidelines for horizontal mergers of enterprises; and 1982.

The "Horizontal Merger Guidelines" jointly issued by the U.S. Department of Justice and the Federal Trade Commission in 1992} clearly stated that the unified theme of the guidelines is that combining wells must not create or increase the influence of the towel field or promote the exercise of towel power.

The provisions of the United States' 1992 Horizontal Merger Guidelines are similar.

The horizontal merger guidelines issued by the US Department of Justice and the Federal Trade Commission in 1992 were revised.

The "Horizontal Merger Guidelines" jointly issued by the U.S. Department of Justice and the Federal Trade Commission in 1992 further clarified the criteria for prohibiting mergers, that is, mergers must not create or enhance market power or promote the exercise of market power.

In 1992, the horizontal merger guidelines jointly issued by the US Department of Justice and the Federal Trade Commission revised this.

In the 1992 United States Horizontal Mergers Guide, the analysis method of potential competition was explained, which has certain reference significance for the enforcement and judicial practice of China's future antitrust law.

d. Guidelines for horizontal mergers in 1992 In April 1992, the United States Department of Justice and the Federal Trade Commission jointly issued guidelines for horizontal mergers of enterprises for the first time. The guidelines clearly stated that non-horizontal mergers were not involved. The amendments to the 1984 merger guidelines were mainly It's technical and written.

In 1992, the US Department of Justice and the Federal Trade Commission jointly issued a guide on horizontal mergers to amend the Department of Justice's 1984 merger guidelines and the Federal Trade Commission's 1982 statement on horizontal mergers guidelines.

The 1992 merger guide was simply called the horizontal merger guide.

The latest revision is the Guidelines for Horizontal Mergers of Enterprises jointly issued by the Ministry of Justice and the Federal Trade Commission in 1992.

In 1992, the U.S. Department of Justice and the Federal Trade Commission also replaced "a small but significant and notable price increase" in their horizontal merger guidelines.

The United States' 1992 Guidelines for Horizontal Mergers have clearly stated that if the merger cannot lead to a high degree of market concentration and a significant increase in market concentration, the merger will not be able to generate or strengthen market power or promote the exercise of market power.

In the 1992 Horizontal Merger Guidelines, when judging whether there is a horizontal merger, it is required to analyze the following factors: whether the merger obviously leads to market concentration; whether it has potential anti-competitive effects; whether it affects sufficient market entry; whether it can obtain reasonable benefits; and This benefit can be obtained by the parties through merger; whether it is the only way to prevent the parties from going bankrupt or being squeezed out of the market32.

The United States' 1992 Guidelines on Horizontal Mergers pointed out that antitrust agencies should consider whether potential market entry can promptly, possibly and adequately prevent or offset the anti-competitive effects of mergers. If companies entering the market can achieve this effect, this market It is an accessible market, and mergers in this market cannot produce or promote the exercise of market power.

In 1992, the U.S. Department of Justice and the Federal Trade Commission jointly issued the Guidelines for Horizontal Merger for the first time, which changed the previous standard for analyzing market concentration and market share based on the market structure alone. Some new standards were proposed, including: a) whether the merger Significantly leads to market concentration.

4. 1992 Horizontal Merger Guide Master's Degree Thesis On April 2, 1992, the U.S. Department of Justice and the Federal Trade Commission jointly issued guidelines for horizontal mergers of companies for the first time to amend the 1984 Merger Guide and the Federal Trade Commission 1982 Statement on Horizontal Merger Guidelines.

In April 1992, the United States Department of Justice and the Federal Trade Commission jointly issued a new 1992 horizontal merger guide.

4. "Guidelines for Horizontal Merger" issued jointly by the Ministry of Justice and the Federal Trade Commission in 1992

The 1992 Horizontal Mergers Guidelines provided a specific framework on how to analyze the monopoly effects of corporate mergers and acquisitions, but they had no legal effect and played a guiding role.

On April 2, 1992, the United States Department of Justice and the Federal Trade Commission Guidelines for Horizontal Mergers were issued to regulate horizontal mergers of businesses.

[Note] The wording adopted in the 1992 Horizontal Mergers Guide is that mergers must not generate or expand market power, nor promote the exercise of market power, because the use of market power can cause wealth to flow unreasonably from one party to the other, causing errors in social resources Configuration.

The Horizontal Merger Guidelines promulgated in 1992, as a concentrated reflection of US merger policy, provides an analytical framework for corporate merger monitoring.

The United States' 1992 Guidelines on Horizontal Mergers clearly stated that antitrust authorities should consider whether potential market entry can prevent, or adequately prevent or offset the anti-competitive effects of mergers, if companies entering the market can achieve As a result, this market is an easily accessible market, and mergers in the market cannot produce or strengthen market dominance.

The 1992 Horizontal Mergers Guide considers mergers to be the result of free competition. Mergers that benefit consumers and do not hinder competition are reasonable mergers and should be recognized.

In 1992, the U.S. Department of Justice and the Federal Trade Commission jointly issued a guide to horizontal mergers.

According to the 1992 Horizontal Merger Guidelines of the United States, antitrust law should examine and judge the horizontal mergers of enterprises from the following aspects: whether the merger has obviously led to market concentration; what are the potential anti-competitive effects of the merger; The degree of impact on market entry; the impact of mergers on efficiency; and whether mergers are the only way for companies to avoid bankruptcy.

In 1992, the Federal Trade Commission and the Department of Justice jointly issued guidelines for horizontal mergers (Ilo.

The 1992 United States "Horizontal Merger Guidelines" reflected the deregulation of corporate mergers that are conducive to international competition, which exacerbated the concentration of international markets.

Horizontal mergers are all direct competitors. Such mergers inevitably lead to a reduction in the number of market competitors. Therefore, horizontal mergers have been strictly restricted by the "Horizontal Merger Guidelines" issued by the US Congress in 1992, which is the focus of antitrust law.

For example, the 1992 United States "Horizontal Merger Guide" reflects the United States' position on deregulation of business mergers that are conducive to international competition.

(I) Guidelines for Horizontal Mergers in 1992. Legal Horizontal mergers refer to mergers between manufacturers of similar products or mergers between sellers of similar products.

The 1992 Merger Guidelines were directly called horizontal merger guidelines, which shows that the United States' control of corporate mergers has gradually shifted from comprehensive intervention to selective intervention.

Let's take a look at the merger guidelines issued by the US Department of Justice and the Federal Commission: The current guidelines are the non-horizontal merger sections of the United States Department of Justice and the Joint Trade Commission's 1992 modal merger guidelines and the US Department of Justice's 1984 merger guidelines.

The United States' 1992 Horizontal Merger Guidelines stipulate that companies are allowed to merge without authority intervention to increase efficiency.

In 1992, the Ministry of Justice and the Federal Trade Commission issued a new guide on horizontal mergers.

For example, in the United States of America's horizontal merger guideline formulated in 1992, the Department of Justice and the Federal Trade Commission explicitly proposed an analytical method to evaluate whether a horizontal merger has anti-competitive effects.

The 1992 Horizontal Merger Guidelines clearly state that the Federal Trade Commission and the Department of Justice should evaluate mergers "in an economically significant market."

The 1992 Horizontal Merger Guidelines also assume that a monopolistic producer exists and observe how consumers react when prices undergo a "small but meaningful non-temporary" increase.

The United States' 1992 Horizontal Mergers Guide also pointed out that mergers must not generate or expand market power, nor promote the exercise of market power, because the exercise of market power will in any case lead to the unreasonable distribution of wealth, and the result is the error of social resources Configuration.

In 1992, the U.S. Department of Justice and the Federal Trade Commission jointly issued the "1992 Horizontal Merger Guidelines," which focus on regulating horizontal mergers between companies. If the market structure is affected, they can be prosecuted.

For example, in 1988, the US government stipulated that any foreign equity investment involving national security must undergo administrative review. In addition, important corporate mergers and acquisitions in accordance with the "horizontal merger guidelines" must apply to the Department of Justice and the Federal Trade Commission for review in advance, and set the review standards.

Therefore, the acquisition of American Motors by Chrysler Motors in 1987 represented a horizontal merger or horizontal merger, and the formation of a larger enterprise may have economies of scale.

In 1987, the League of Communists published the "Strategy of Economic Environment Change and Competition Policy", stating that if a holding company system is not set up, it will be difficult for domestic and foreign business activities of large enterprises to begin freely; in order to smoothly achieve horizontal mergers, corporate reorganizations, and overseas operations In conducting business, it is necessary to relax restrictions on holding companies.

The 1984 Mergers Guide adopted a dichotomy of horizontal and non-horizontal mergers, while the 1992 Mergers Guide simply dealt with horizontal mergers.

The 1984 Merger Guidelines adopted a "dichotomy" approach to emphasize that only horizontal mergers are at the core of merger policy concerns.

The 1984 Mergers Guide distinguishes mergers into horizontal mergers and non-horizontal mergers.

In revising the merger guidelines in 1984, the U.S. Department of Justice did not adopt the traditional "tripartite" method of horizontal mergers, vertical mergers, and hybrid mergers. Instead, it adopted the "dichotomy" of horizontal mergers and non-horizontal mergers to emphasize that only Horizontal integration is the core of concern for merger policy.

The merger guide of 1984 did not adopt the traditional three-way method of horizontal merger, vertical merger and mixed merger. Instead, it adopted the dichotomy of horizontal merger and non-horizontal merger. The merger guide of 1992 only involved horizontal merger. problem.

When the merger guidelines were revised in 1984, the U.S. Department of Justice did not adopt the traditional "horizontal" method of horizontal mergers, vertical mergers, and hybrid mergers. Instead, it adopted the "dichotomy" of horizontal mergers and non-horizontal mergers. It is emphasized that only horizontal mergers are the core concern of merger policy.

Second, since the "Guide to Merger" in 1984, U.S. legislation has adopted horizontal mergers and non-horizontal mergers. The "dichotomy" emphasizes that only horizontal mergers are the core of policy concerns, and that non-horizontal mergers (that is, vertical mergers) And mergers) adopted a tolerant attitude, which has cleared legal barriers for cross-industry mergers and acquisitions of multinational companies.

(2) Non-horizontal mergers in the 1984 merger guidelines Non-horizontal mergers include vertical mergers and mixed mergers.

The United States' Merger Guidelines of 1984 explicitly made positive evaluations of business mergers that improved economic efficiency, allowing companies to improve their economic efficiency through mergers, and were further supported and affirmed in subsequent horizontal merger guidelines of 1992 and 1997.

This is related to the relaxation of horizontal merger control in the "Business Merger Guidelines" issued by the Ministry of Justice and the Federal Trade Commission in 1984.

When the Merger Guidelines were revised in 1984, the U.S. Department of Justice did not adopt the traditional "tripartite" method of horizontal merger, vertical merger, and hybrid merger. Only horizontal mergers are at the core of merger policy concerns.

The 1984 guidelines adopted the dichotomy of horizontal mergers and non-horizontal mergers and clearly stated that if mergers should have been prohibited, if the company can provide clear and convincing evidence that the merger will significantly improve the economic benefits of the company, the merger should Without interference from the Ministry of Justice.

There were no such provisions in the 1982 and 1984 Merger Guidelines and the 1992 Horizontal Merger Guidelines.

The 1982 merger guide was simply called the horizontal merger guide.

Guidelines for Horizontal Mergers were developed in 1982 and new Guidelines for Horizontal Mergers were introduced in 1992

(Sigh) The 1982 merger guidelines improved the concentration standards, and the market scope was carefully defined. The 982 merger guidelines still focused on horizontal mergers.

The successive publication of the 1982, 1984, and 1992 merger guidelines indicates that the United States government has basically not interfered with non-horizontal mergers, and that the authorities have also adopted a relaxed attitude in the implementation of these guidelines.

Partial amendments made in 1982, 1984, 1992, and 1997, respectively. The "horizontal merger guidelines" issued in 1992 are two federal agencies that have competing jurisdiction over antitrust cases, the U.S. Department of Justice and the Federal Trade Commission. The first jointly issued merger guidelines.

Before the U.S. Department of Justice promulgated the "Merger Guide," it had mainly adopted a structural policy, namely, splitting monopoly industries and prohibiting horizontal mergers.

According to the "Business Merger Guidelines" issued by the United States in 1968, mergers can be divided into horizontal mergers, vertical mergers, and hybrid mergers, which should be treated differently when conducting merger control.

The Merger Guidelines promulgated in 1968 stipulated the maximum market share allowed for horizontal mergers, vertical mergers, and mixed mergers. Antitrust charges will be imposed if they exceed the prescribed limits.

The United States 1968 "Guide to Business Mergers" made more specific provisions on the criteria for banning horizontal mergers.

According to the "Business Merger Guidelines" issued by the U.S. Department of Justice in 1968, the control of business mergers is quite strict. According to this document, horizontal mergers (mergers between competitors) and vertical mergers (mergers between transaction parties) are almost uniformly imposed. Prohibited and mixed mergers are also considered as quasi-horizontal mergers and are subject to regulation.

In addition, the Department of Justice's guidelines for business mergers issued in 1968, 1982, and 1984, and the horizontal merger guidelines issued by the Department of Justice and the Federal Trade Commission in 1992, although these guidelines are not legally binding, they also reflect the United States Corporate merger control policy in judicial practice.

The United States introduced the Merger Guidelines in 1968 to regulate horizontal mergers, vertical mergers, and mixed mergers, and later revised them in 1984.

The Horizontal Merger Guidelines issued by the US Department of Justice in 1968 adopted a structuralist proposition, setting the maximum market share allowed by law for the merged enterprise and the merged enterprise.

According to the judgment of the United States Court of Justice and the Department of Justice's 1968 merger guidelines, it can be said that in the United States before the 1980s, horizontal mergers were still the most stringent scrutiny, although they were not illegal.

The "Combination Guidelines" of the Ministry of Justice of 1968 stipulated the maximum market share allowed by the merged enterprise and the merged enterprise for horizontal merger, vertical merger and mixed merger.

The first guidelines issued by the Ministry of Justice in 1968 were quite harsh on all types of mergers, especially horizontal mergers, and almost regarded them as, of course, illegal.

Of the more than 700 mergers that took place in the UK in 1965 alone, with the exception of 22 horizontal mergers, almost all of them were mixed mergers.

The United States in 1965 (Merger Guidelines) also used the market structure method to regulate vertical mergers, which is basically similar to the regulation of horizontal mergers.

For example, in accordance with the prohibition on the holding of shares, the Japan Petroleum incident was dealt with in 1951 and the Japanese musical instrument incident in 1957; the Hiroshima Electric Railway incident was dealt with in 1973 in accordance with the prohibition on concurrent appointments of management personnel; Handled the horizontal merger of Hachiman and Fuji steel companies; in 1954, the horizontal merger of Toho and Aung Su was handled in accordance with the prohibition of business transfer.

The "Seller-Kifaufer Act" introduced in 1950 corrected the loopholes in the "Clayton Act" and imposed stricter restrictions on vertical and horizontal mergers, which made it happen in the 1950s and 1960s. In the third wave of mergers, the number of vertical and horizontal mergers has been greatly reduced, and more hybrid mergers have been replaced.