What type of merger occurs when two companies in the same industry combine?

A horizontal merger takes place when two companies operating in the same industry and often at the same stage of production come together. This type of merger is intended to enhance the merged entity's market share, reduce competition, and achieve economies of scale. For instance, if two car manufacturers merge, they would be considered to be participating in a horizontal merger as they are both producing similar products within the same industry.

In contrast, a conglomerate merger involves companies from completely different industries coming together, which does not fit the description of companies in the same industry. A vertical merger occurs between companies at different stages of production within the same industry—such as a supplier merging with a manufacturer—rather than between direct competitors. Finally, a joint venture merger refers to a cooperative arrangement wherein two or more parties agree to develop a new entity or project while maintaining their separate identities; this is not a merger in the traditional sense.

By understanding the distinctions in merger types, it becomes clear that a horizontal merger is specifically about combining businesses that are direct competitors or operate within the same sector, thereby reinforcing the correctness of identifying it as the appropriate answer.