Rachel Brandenburger, Logan Breed and Falk Schöning ‘The Role of Innovation in Merger Control’ (2016) CPI July (1)

This paper argues that role of innovation in merger control is a hot topic because “recent statements and enforcement actions on both sides of the Atlantic reflect the agencies’ growing emphasis on innovation in their merger investigations and decisions”. The paper provides an overview of these developments. The paper begins by providing an overview of the context in which this increased focus on innovation is taking place. First, because technological development is now fundamental to business success in so many industries, assessing the impact of mergers on innovation now plays a key role in merger control. Second, innovation is at the heart of wider policies, such as the “Europe 2020 strategy” and the US’ “Strategy for American Innovation”. The paper then moves to the more interesting topic of how innovation has been taken into account in practice by enforcement agencies. In Europe, the European Commission has focused on the effects of a merger on innovation in a number of decisions…

Raphael De Conink ‘Innovation in EU Merger Control’ (2016) Competition Law & Policy Debate 2(3) 41

This paper – which can be found here – argues that these a consistent framework for taking account innovation is necessary in EU merger control. The article is structured as follows: Section 1 refers to recent Commission decisions addressing the impact of mergers on innovation. In particular, the Commission has been more interventionist in recent pharmaceutical mergers, such as in Novartis/GSK Oncology and in Pfizer/Hospira, and requested divestments of pipeline products – including, in some cases, products at an early stage of development. The Commission has also stressed the need to protect innovation as a rationale for divestment in other technology-driven industries, most recently and prominently in the context of the GE/Alstom. Section 2 summarises some of the economic evidence and debate on this topic. We are treated to a review of the literature on competition and innovation. There is a wealth of empirical analysis addressing the potential effects of competition on innovation. While the insights of such research do…

Reinhilde Veugelers ‘Innovation in EU merger control: Walking the talk’ Bruegel Policy Contribution 2012/04, February 2012

This relatively old paper – which can be found here – argues that the Commission makes all the right sounds on innovation, but it is not putting its “talk” into practice. Few cases have been actually examined for their innovation effects, and even in these few cases innovation effects have not been decisive for the ultimate competition assessments. In particular, verifiability seems to be a major constraint for DG COMP, preventing it from fully incorporating innovation effects into its analyses. The paper begins with a review of how the Commission took innovation claims into account in merger control assessments up until 2012. This section concludes that, while the Commission can take efficiencies into account as part of its substantive analysis of the consequences of a merger – usually to counterbalance perceived anti-competitive effects –, the evidence is that the Commission has made little use of this option. On the basis of the limited sample of cases where efficiencies were explicitly…

Nicolas Petit ‘Significant Impediment to Industry Innovation: A Novel Theory of Harm in EU Merger Control?’ ICLE Antitrust & Consumer Protection Research Program White Paper 2017-1

This paper – which can be found here – discusses a novel theory of harm applicable in EU merger control (Nicolas Petit ‘Significant Impediment to Industry Innovation: A Novel Theory of Harm in EU Merger Control?’). Under this theory, the Commission can intervene in mergers that reduce innovation incentives in an industry as a whole. The author considers that this theory focuses on identifying on Significant Impediment to Industry Innovation (“SIII”). This paper first attempts to describe the content and extent of the SIII theory. Second, it attempts to show that the SIII theory is a marked departure from established EU merger control practice. Third, it discusses the economic foundations of the SIII theory. Finally, it puts forward best practices for the assessment of mergers in R&D intensive industries. We will now look at each in turn. SIII theory provides that a merger can and should be prohibited where it can be demonstrated that it will “lead to a reduction of innovation” in a…

John M. Newman ‘Complex Antitrust Harm in Platform Markets’ Antitrust Chronicle 2017, Spring, Vol. 1(2)

This paper – which can be found here – develops a rather orthodox argument about market leveraging and foreclosure. In short, the argument is that: “Under certain conditions, digital platforms can harness the power of reputation to steer users to favored suppliers. This steering forecloses non-favored suppliers in a related, though distinct, relevant market. Where favored suppliers are able to split the resulting rents with the platform, the strategy s rational. The resulting foreclosure reduces efficiency and consumer welfare.” In short, “Platform markets exhibiting substantial algorithm-driven reputation competition can facilitate a unique type of competitive harm. This article briefly summarizes the marketplace evolutions that have fiercely intensified [algorithm driven] reputation competition. It then describes this novel second-order, out-of-market competitive harm that can arise as a result of certain conduct in such markets.” Given this, it is unsurprising that the paper begins with a discussion of why reputation is relevant to competition. Antitrust doctrine generally treats “consumer choice” as being good. Yet…

Tim Wu ‘Blind Spot: The Attention Economy and the Law’ (2017) Concurrences

This paper – which can be found here – seeks to address an imbalance: while it “has become commonplace, especially in the media and technology industries, to speak of an “attention economy” and of competition in “attention markets” (…)the study of “attention markets” has only very recently become of interest to legal scholars, and only in connection with specific cases (…)”. This paper is “an effort to close that gap, and show why a better understanding of attentional markets will be critical to addressing pressing legal issues, such as antitrust’s treatment of the high technology industry and emerging public policy questions surrounding the “theft” of attention from captive audiences.” The fulcrum of the analysis is the “attention broker” – someone who “attracts attention by offering something to the public and then reselling that attention to advertisers for cash”, such as Google, Facebook or, more prosaically, TV channels and free subway newspapers. The author contends that the concept of “Attention Brokers”…

Darren S. Tucker ‘The Proper Role of Privacy in Merger Review’ CPI Antitrust Chronicle May 2015 (2)

This is  a (short) paper on the proper role of privacy in merger review, which can be found here. While focusing mainly on the US (where there have “been increasing calls for the Federal Trade Commission (“FTC”) and U.S. Department of Justice (“DOJ”) to consider the potential loss of consumer privacy as a factor in their merger reviews and to challenge mergers of firms with large stores of personal data that otherwise pose no apparent competitive issues”), it could be read more generally. The argument in this paper is quite straightforward: the law is clear that non-competition factors – such as standalone consumer concerns – cannot be considered in antitrust analysis. Further, the law seems to be on sound policy grounds. The paper begins by arguing that there are good reasons why privacy should not be applied as a competitive parameter. First, there are a variety of concepts of privacy, and it is unclear which one should be applied. Secondly,…