LAW & ECONOMICS: MERGERS - DIGITAL PLATFORMS - KILLER ACQUISITIONS - RISK ASSESSMENT

Digital conglomerates and killer acquisitions: A discussion of the competitive effects of start-up acquisitions by digital platforms

Digital platforms are growingly suspected to acquire promising start-up companies to “kill” future competition (the “killer acquisition” concern) and/or extend their domination by acquiring complementary services in neighbouring markets resulting in marginalisation of rivals and higher barriers to entry (the “digital conglomerate” concern). This article assesses horizontal and conglomerate effects raised by such mergers and discusses the extent to which a change in competition law in Europe is needed to deal with these cases. It concludes that, given the high uncertainty regarding future competition, changes proposed by observers to the current EU merger control risk leading to misconceived theories of harm and reversing the burden of proof for digital mergers is likely to deprive customers from procompetitive benefits and jeopardise innovation in the digital sector.

I. Introduction 1. Digital platforms are under growing scrutiny. Commentators have been particularly vocal about acquisitions of start-ups by digital platforms, whose growing number is interpreted by some as a sign of underenforcement. A recent report prepared for the UK government by a digital competition expert panel, headed by Professor Jason Furman (“the Furman report”), notes for instance that companies such as Amazon, Apple, Facebook, Google and Microsoft have engaged in close to 250 acquisitions globally in the last five years, none of which have been prohibited. [1] Concerns expressed with respect to these acquisitions are mainly twofold. 2. First, these acquisitions would be a way for digital platforms to “kill” future competition by acquiring a promising start-up which might

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Tristan Lécuyer, Digital conglomerates and killer acquisitions: A discussion of the competitive effects of start-up acquisitions by digital platforms, February 2020, Concurrences N° 1-2020, Art. N° 92964, pp. 42-50

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