EU Competition Policy, Vertical Restraints, and Innovation: An Analysis from an Evolutionary Perspective
World Competition, Vol. 28, No. 4, pp. 507-532, 2005
Posted: 14 Jan 2008
The EU competition policy in regard to vertical restraints is mainly based upon neoclassical efficiencyoriented reasonings, leading to a neglect of the innovation dimension. This article analyses to what extent evolutionary theories of competition and innovation economics can be used to derive additional new criteria for the assessment of vertical restraints. It is shown that Neo-Schumpeterian and Hayekian approaches to competition and innovation economics as well as knowledge-based theories of the firm are capable of providing a basis for a different framework for analysing the impact of vertical agreements. Specific evolutionary arguments, such as subjective and local knowledge, the heterogeneity of knowledge bases of firms, communication and learning problems, and the complementarity of knowledge (systemic innovations) can be used for deriving additional, new assessment criteria for vertical restraints. Particularly important is the consideration of the impact of vertical restraints on competition as a process of experimentation with new products, services, and retail formats. The analysis is made against the background of the most recent reforms of EU competition rules in regard to vertical restraints (especially the new Block Exemption Regulation in the motor vehicle industry). This article also shows how evolutionary approaches to competition and innovation might be used for deriving new, additional criteria for competition policy in general.
JEL Classification: K21, L42
Suggested Citation: Suggested Citation