This paper begins by examining how competition policy toward vertical integration has evolved over the past decade to become increasingly skeptical of the benefits of both vertical conduct and vertical mergers, while becoming more concerned about the potential harms from such activities. The paper will argue that, although there are some good reasons for this increased skepticism about vertical conduct in light of arguable under-enforcement in the past, the new antitrust thinking about vertical relationships has neglected governance and transaction-cost considerations. The paper explains both how and why governance considerations have receded in competition enforcement but then explains how proper consideration of transaction cost rationales for vertical integration is consistent with, and can be applied to advance, a more effective and rigorous antitrust policy toward vertical conduct and transactions.