A merger that results from the combination of competitors within the same geographic market. In a broader sense, a horizontal merger may also involve companies that produce identical or closely related products in one geographic market. For instance, a merger between two technological companies, each located in a different state or governorate or region. This type of mergers is usually resorted to in order for companies to benefit from economies of scale and scope from combining their technical capabilities, market expertise and financial and material resources. Additionally, horizontal mergers may allow companies to realize cost savings by reducing redundant resources or overlapped processes.
Horizontally merged companies may also be able to amass market power at the expense of weak competitors. Market power can be attained by having the ability to increase prices at a specific market without losing market share to competitors.
