horizontal expansion

Is horizontal expansion bad for consumers? It seems to me that fewer firms in an industry mean less competition and higher prices.

Horizontal expansion tends to cut costs because the new products can be sold through the same distribution pipe or channels the company already has. GE is a master of this. While famous for a few major acquisitions, they actually do best when “filling in gaps," such as with line extensions or horizontal expansion. Colgate-Palmolive did this in the health and beauty aids business when they bought Tom's of Maine. What is the impact on pricing? Lower costs mean lower sales prices. Tom's toothpaste is now available on promotions at 25% to 35% less than when owned by Tom's, though the company is still run by the original Tom's people.

Deaver Brown, Publisher, Simplysoftwarecd.com, Lincoln, MA