The Structure of Merger Law

Herbert Hovenkamp*

Antitrust analysis of mergers is complex, and the number of mergers is large. This makes manageable rules essential. A better classification would divide mergers into two categories. First are mergers that facilitate collusion or collusion-like behavior. Second are mergers that facilitate market exclusion. The latter category includes mergers of complements, which include vertical mergers and most mergers involving networks or ecosystems.⁵⁵ A vertical merger is strictly a merger of complements. Some mergers might facilitate both types of harm, and they can be evaluated accordingly.⁵⁶ The ultimate concern is whether the merger facilitates a market-wide price increase in at least one product that could harm consumers or workers, or else a limitation on innovation.

Complements are products or services that are either produced together (“complements in production”) or used together (“complements in use”). All vertical mergers are mergers of complements. That is, production and its inputs, from raw materials to distribution, are complementary goods that either the firm or its customers must provide. Mergers of complements frequently serve to coordinate production internally by reducing either production or transaction costs. The likelihood of efficiencies, measured as cost reductions or quality improvements, is much larger when the merger includes a significant union of complements.

What is more subtle but nevertheless present, this Article argues, is extensive complementary relationships in nominally horizontal or potential competition mergers. For example, two retailers may compete, but at different locations,⁷⁶ price points,⁷⁷ or quality levels.⁷⁸ One of them may offer products, services, or features that the other does not. As a result, the postmerger firm can provide a wider or better set of goods or services than it did prior to the merger.

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© 2025 Herbert Hovenkamp. Individuals and nonprofit institutions may reproduce and distribute copies of this Article in any format at or below cost, for educational purposes, so long as each copy identifies the author, provides a citation to the Notre Dame Law Review, and includes this provision in the copyright notice.

*James G. Dinan University Professor, University of Pennsylvania Carey Law School and the Wharton School.

55 See infra notes 76–83, 397–425 and accompanying text.

56 See, e.g., Brown Shoe Co. v. United States, 370 U.S. 294, 323–46 (1962) (challenging and condemning both the horizontal and the vertical aspects of a merger—the former between two firms as competitors, the latter between a manufacturer and a retailer).

76 See, e.g., United States v. Von’s Grocery Co., 384 U.S. 270, 272 (1966); see also infra notes 154–61 and accompanying text (discussing the Kroger-Albertson’s merger challenge).

77 See, e.g., United States v. JetBlue Airways Corp., 712 F. Supp. 3d 109, 122 (D. Mass. 2024) (distinguishing low-price and ultra-low-price carriers).

78 See, e.g., Brown Shoe Co. v. United States, 370 U.S. 294, 298 (1962) (commenting on how Kinney, the acquired firm, made cheaper shoes than Brown).