Vertical consolidation is one of two ways in which businesses can try to expand. It involves buying firms up or down the supply chain. In such a case, a firm would buy companies that provide it with the materials it needs to produce its goods. It might buy stores that sell its goods. Either way, it is buying firms that did not compete with it but which were part of making or selling the product it made originally.
In comparison, horizontal consolidation is where a firm buys out its competitors. It buys other companies that make the same sort of products so that its market share increases.
