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    Vertical Integration and Market Foreclosure

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    Please help with the following problems.

    Explain the phenomenon of market foreclosure. Specifically, explain how a vertical merger may "substantially lessen competition or tend to create a monopoly" by virtue of market foreclosure. Explain how the following mergers might result in market foreclosure:

    a. A shoe manufacturer integrates "downstream" by merging /acquiring a shoe retailer (make reference to the Brown Shoe case here).

    b. A dominant cable TV distributor (such as Time-Warner or Sudden Link) integrates "upstream" by the merger/acquisition of programmers such as HBO, MTV, or ESPN.

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    Solution Preview

    Generally speaking, the idea of market foreclosure in vertical integration is that when two companies (where one is a supplier) turn into one company, competitors in either downstream or upstream markets are closed out of the market they ...

    Solution Summary

    This solution discusses how vertical integration can lead to market foreclosure using examples from the TV industry. The explanation is given in 159 words.