By Malcolm B. Coate –
Vertical analysis may play an important role in antitrust policy for Internet-related markets. As anticompetitive effects are horizontal in nature, this paper proposes a three-step review process, first focusing on the core competitive effect, then the potential for exclusion and finally balancing of efficiencies and anticompetitive effects. Two illustrations are offered, one for the Microsoft litigation and the other for the consummated Facebook/Instagram merger. The Microsoft discussion highlights the complications of vertical analysis, and posits an expected value standard for anticompetitive effects. For mergers comparable to Facebook/Instagram, consummated transactions may be anticompetitive even with a comprehensive efficiency review.