Definition: Horizontal integration

Category: Business registers

Two legal units are said to be horizontally integrated if they are within the same enterprise group, carry out similar or complimentary activities, are managed as one business, and present themselves as a single business to the market. This means that their operations are integrated, they share resources, inputs are combined, and marketing is done for the business as a whole. If two (or more) legal units are horizontally integrated they can not be considered to act autonomously. Thus, the legal units should be combined to form a single enterprise.

The concept of "complimentary activities" is used here because the activities of horizontally integrated businesses involve similar inputs, and processes. Activities may be complimentary without necessarily falling into the same position of the classification of economic activities. An example could be units that buy steel tubes, and use similar processes and shared resources to make metal furniture and bicycles respectively. http://ec.europa.eu/eurostat/ramon/statmanuals/files/KS-32-10-216-EN-C-EN.pdf