In June 2018, a federal court judge ruled against the U.S. Department of Justice, which was attempting to block a merger between AT&T and Time Warner. In addition to its wireless business, AT&T owned the DirectTV satellite television service. Time Warner owned HBO, TBS, TNT, and the Warner Brothers film studio. An article in the Wall Street Journal on the judge’s ruling noted, “The case marked the first time in 40 years that a court had seen a fully litigated challenge to a so-called vertical merger. . . . Such cases are considered more difficult for the government to win than the typical ‘horizontal’ merger case.”

a. What is a vertical merger case? Why would AT&T buying Time Warner be an example of a vertical merger? 

b. Why might it be more difficult under the federal antitrust laws for the government to persuade the courts to stop a vertical merger than to persuade the courts to stop a horizontal merger?