Innovation and competition: Are mergers promoting innovation? (New Frontiers of Antitrust - Paris, 26 June 2017)

The question how mergers affect innovation has gained prominence in a number of recent merger cases. Accounting for the likely effects of mergers on innovation is difficult for a number of reasons, though. First of all, the relationship between market concentration and innovation is far from clear and not unambiguous. Secondly, while mergers may result in innovation efficiencies, these may be difficult to demonstrate, given that the European Commission requires the efficiencies to accrue in a timely fashion, i.e., within two to four years after the merger. Thirdly, remedies are notoriously difficult to design, and this is even more valid for innovation markets. The growing importance of innovation in our modern economies, in particular in the digital and petrochemical sectors, have led us to reconsider our analysis grid of the expected effects of the merger on innovation and the answers we could provide. Recent cases, which concern horizontal as well as conglomeral and vertical mergers, invite us to explore the limits of merger control and to find new ways of evaluating the effects a merger may have on the incentive and capacity to innovate (new tests, new standards to be adapted to different actors or sectors).

*This article is an automatic translation of the original article, provided here for your convenience. Read the original article. Introductory remarks Isabelle de Silva President, Autorité de la concurrence, Paris 1. Innovation is an essential component of competitive dynamics. At the same time, it promotes economic growth and consumer welfare. 2. In terms of competitive analysis, it should be noted that the consideration of innovation may lead to a qualification of the lessons to be drawn from a small overlap in market [1]shares. Moreover, the concentration/innovation relationship is ambiguous, since it may, in some cases, "increase the ability and incentive of firms to bring new innovations to the market and thus the competitive pressure on rival firms to innovate in that market.

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Isabelle De Silva, Justus Haucap, Innovation and competition: Are mergers promoting innovation? (New Frontiers of Antitrust - Paris, 26 June 2017), November 2017, Concurrences N° 4-2017, Art. N° 84946,

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