A horizontal merger occurs when two companies in the same industry and at the same stage of production combine their operations. This type of merger typically aims to increase market share, reduce competition, and achieve economies of scale. For example, if two soft drink manufacturers merge, they can streamline production and distribution, leading to cost savings. These mergers can also enhance product offerings and expand customer bases. However, they may raise regulatory concerns, as they can lead to reduced competition in the market. Regulatory bodies, such as the Federal Trade Commission in the United States, often review these mergers to ensure they do not create monopolistic practices.