Navigating the backwater vertical mergers in health care

Long a part of the backwaters of antitrust enforcement, vertical mergers have recently attracted the attention of academics and enforcers. The Federal Trade Commission’s hearings on vertical merger policy and the issue of whether to publish new Vertical Merger Guidelines,2 along with recent cases including the Department’s unsuccessful challenge to AT&T’s acquisition of Time Warner3 and speeches by enforcement officials4 illustrate a renewed focus on vertical combinations. It is widely recognized that the Department of Justice Non-Horizontal Merger Guidelines are out of date and do not reflect modern economic thinking or government enforcement policy. Indeed, a large body of theoretical and empirical work has served to undermine the economic foundations of the laissez-faire approach that has characterized government policies over the last thirty years.