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What is the process of a vertical merger?

 
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In a vertical merger one firm acquires either a customer or a supplier. Because horizontal mergers pose a direct threat to competition they have been regulated more aggressively by the federal government than vertical mergers. Nevertheless vertical mergers may in some circumstances be anticompetitive and violate federal antitrust laws. Firms vertically integrate for many reasons. Some of the most common are to reduce uncertainty over the availability or quality of supplies or the demand for output to take advantage of available economies of integration to protect against monopolistic practices of either suppliers or buyers with which the firm must otherwise deal and to reduce transactions costs such as sales taxes and marketing expenses. Through a vertical merger the acquiring firm may lower its cost of production and distribution and make more productive use of its resources.

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