Expert Dr. Daniel Spulber recently published the article "Antitrust Merger Policy Innovation Competition" with co-author Alden F. Abbott in the Journal of Business & Technology Law. Spulber and Abbott argue that antitrust policymakers should be cautious of blocking mergers based on presumed harm to innovation. They suggest that applying advances in the economics of technology and innovation can better evaluate whether mergers lead to innovative efficiencies or harm, finding that both horizontal and vertical mergers, as well as acquisitions of entrants, can promote innovation competition by increasing investment and entrepreneurship.
Abstract:
Antitrust policymakers in the United States and the European Union have announced that certain mergers should be blocked because of the presumed harm to innovation. Companies increasingly engage in innovation as a primary means of competing with rivals. This article considers the implications of innovation competition for antitrust merger policy. We argue that the presumption of innovative harm risks diminishing competition and reducing innovation. We propose an approach to evaluating whether mergers may lead to innovative efficiencies or harm. Furthermore, we suggest that the application of advances in the economics of technology and innovation can help determine the effects of mergers on welfare. We find that horizontal mergers can promote innovation competition by increasing innovative investment and expanding the benefits of innovation. We also find that vertical mergers can promote innovation competition by increasing innovative investment and improving commercialization. We further find that acquisition of entrants can increase entrepreneurship and innovation. We recommend that the Department of Justice and Federal Trade Commission Merger Guidelines should apply economic analysis to evaluate the effects of mergers on innovation competition
The full article is available here.
The views expressed in this article are solely those of the authors, who are responsible for the content, and do not necessarily represent the views of Vega Economics. For more information about Prof. Spulber, please email experts@vegaeconomics.com.