What are the effects of vertical mergers on competition?

Vertical mergers occur when two companies in different stages of production combine, such as a manufacturer and a retailer. In Washington, antitrust law generally prohibits any agreements that limit competition or restrain trade in a way that harms consumers. Vertical mergers can have an effect on competition by limiting the choices available to consumers. For example, if a manufacturer and a retailer combine, they may be able to limit the number of their competitors and charge higher prices. This type of merger can also reduce the incentives of other companies to innovate and invest in research and development. Vertical mergers can also have an effect on the competitive balance between small and large companies. Smaller companies may be weakened due to their limited resources and access to certain markets. On the other hand, larger companies may be able to use their increased resources to limit the competition and drive up prices. Overall, vertical mergers can have a negative effect on competition by limiting consumer choices, reducing incentives to innovate, and creating an uneven balance between smaller and larger companies. Washington antitrust law seeks to protect consumers by preventing anti-competitive practices such as vertical mergers.

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What are the effects of vertical mergers on competition?

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