You mention Lockheed's acquisition of Northrup Grumman, which has been challenged by the Department of Justice. The case has both horizontal and vertical aspects. Neither aspect concerns me greatly.
The companies are, as you say, competitors in some three-firm markets. The merger would leave two rivals in those markets. The department has far stricter standards than I think appropriate. There is a chasm between the effects on competition of monopolies and of two-firm markets (duopolies). That is evident everywhere in the real world as opposed to mathematical theories of oligopoly or duopoly behavior. In the United Shoe Machinery case, for example, United's profits were far higher where it was the sole supplier than in markets where it faced even one smaller competitor. In complex products such as military hardware the situation is far too complicated and constantly changing to permit managements to restrain competition without overt collusion. Collusion can easily be monitored by the purchaser, the U.S. government. Thus, if there is a significant efficiency gain from the merger, I would counsel letting it go forward.
There is even less reason to be concerned about the vertical aspects of the merger. Northrup and Raytheon both supply military electronic systems to Lockheed. There is no reason to believe that Lockheed will purchase only from Northrup after the merger. That would not be in Lockheed's and hence the merged firm's interest if Raytheon were offering better products or prices. To do so would harm its position with respect to Boeing or ITT. Even when General Motors had well over half of the American automobile market, it constantly reviewed the comparative merits of buying from its owned suppliers or outside suppliers. Here too, not only self-interest but also the oversight of the Pentagon would dictate that Lockheed purchase from inside or outside, depending on the comparative merits of what was being offered.
Microsoft's attempt to purchase Intuit, which offers the leading money management software, is probably too close to the matter in which I am engaged for me to comment. Except, perhaps, to note that Microsoft has closer to 95 percent, rather than the 80 percent you mention, of operating system software for personal computers. I am not sure, in any event, that this would have been only a vertical merger. Microsoft has considerable influence or control (whichever way you want to put it) in applications software.