The entity may sell in different geographic areas if, prior to the merger, one of them has distribution facilities or customers in areas that are not covered by the other entity. A horizontal merger also helps to reduce the threat of competition in the market. In addition, the newly created company may have more resources and market share than its competitors, allowing it to exercise greater control over pricing. A horizontal merger can help a company gain competitive advantages. For example, when a company sells similar products, the combined sale of a horizontal merger will give the new entity a greater market share. The horizontal agreement is a cooperation agreement between two or more competing companies operating at the same level in the market. It is usually a matter of establishing a healthy relationship between competitors. The key clauses of the agreement may contain guidelines on pricing, production and distribution. The agreement can also discuss the exchange of product and market information. Horizontal agreements can result in breaches of cartel and abuse of dominance rules, as these agreements may include competition limitation clauses.
The main and most frequent types of anti-competitive horizontal agreements are price fixing, supply manipulation, market allocation/distribution and refusal of transactions (group boycott). These horizontal agreements generally have the form of an agreement, which is explained in a separate subcategory. A non-binding agreement between direct competitors can be reduced to a restrictive horizontal agreement depending on the state of thought. A horizontal merger can increase a company`s revenue by providing existing customers with an additional product line. See the `horizontal guidelines`: guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal cooperation agreements (OJ L 199 of 11.12.2001, p. 1). OJ C 11, 14.1.2011, p. 1-72). A horizontal merger of two companies that already stand out in the sector can be a better investment than investing a lot of time and resources in product or service development separately. A horizontal merger can increase a company`s revenue by providing existing customers with an additional product line. Horizontal agreements can have negative effects on the market in terms of price and product quality.
On the other hand, horizontal cooperation can generate important economic benefits such as risk sharing, cost reduction, knowledge sharing and accelerated innovation exchanges. A horizontal merger is a merger or consolidation of a business between companies operating in the same sector. Competition is stronger among companies operating in the same space, which means that synergies and potential gains in market share are much greater for merging companies. Horizontal agreements for the exchange of competitively sensitive information may, depending on the circumstances, be considered horizontal anti-competitive agreements and fall under Article 4 of the Competition Act. Whether an agreement is legally binding does not matter in the context of the assessment of competition law; Horizontal agreements are restrictive agreements between competitors operating at the same level of the production and distribution chain. Horizontal agreements that, directly or indirectly, result in or are likely to have the effect of preventing, distorting or restricting competition are in themselves violations. Section 4 of the Competition Protection Act 4054 (the “Competition Act”) prohibits them directly. “Horizontal agreement.” Merriam-Webster.com Legal Dictionary, Merriam-Webster, www.merriam-webster.com/legal/horizontal%20Ament.