Legal Definitions - horizontal merger

A horizontal merger is when two or more businesses that are direct competitors and operate in the same market level combine to form a single entity. This type of merger is also known as horizontal integration.

For example, if two car manufacturers merge, it would be a horizontal merger because they both produce similar products and operate in the same geographic region. Another example is if two grocery store chains merge, it would be a horizontal merger because they both sell similar products and operate in the same market level.

The purpose of a horizontal merger is to increase market share, reduce competition, and gain economies of scale. By merging, the new entity can benefit from increased bargaining power with suppliers and distributors, as well as cost savings from shared resources and operations.