Let's begin by looking at the three different kinds of mergers companies can make. Horizontal mergers occur when companies that make and/or sell the same kinds of products join together. If two companies that both manufacture computers merge, for instance, this is a type of horizontal merger. This kind of merger is beneficial to companies because it decreases competition and may allow the merged company to increase prices.
Vertical mergers occur when a company in a particular industry merges with a company that is in the same industry but occupies a different stage in the production process. When, for instance, a soda company merges with a chain of restaurants in which that soda is sold, it is a vertical merger. The benefit here is obvious. One company will have a consistent market for its product while the other will have a consistent supply.
Conglomerate mergers happen when two companies from different industries merge. Sometimes those industries are related somehow; other times they are not. When an online media retailer merges with a grocery chain, for instance, they make a conglomerate merger. The benefit of a merger like this is the expansion of a company into new fields and markets.
Regulatory agencies keep a close watch on mergers. They are especially likely to challenge those that significantly decrease competition in the marketplace and even threaten to create a monopoly. In cases like this, prices tend to rise, and consumers have fewer choices about where they will spend their money.