Significant Impediment to Industry Innovation: A Novel Theory of Harm in EU Merger Control?

22 Pages Posted: 6 Feb 2017 Last revised: 10 Feb 2017

Nicolas Petit

University of Liege - School of Law; International Center for Law & Economics (ICLE); University of South Australia - School of Law

Date Written: February 4, 2017

Abstract

A novel theory of harm is crystallising in European Union (“EU”) merger control. Under this theory, the EU Commission (“Commission”) can intervene in mergers that it considers generally reduce innovation incentives in an industry as a whole. This theory of harm can be referred to as the Significant Impediment to Industry Innovation (“SIII”) theory. This policy paper first attempts to describe the content and extent of the SIII theory (I). Second, it shows that the SIII theory marks a departure from established EU merger control practice (II). Third, it discusses the economic foundations of the SIII theory (III). Finally, it puts forward best practices for the assessment of mergers in R&D intensive industries (IV). With this, the present paper hopes to assist the development of sound merger control policy in innovative markets, and undermine crude conjectures on the relationship between market structure, patent statistics and industry innovation theory.

Keywords: competition, innovation, mergers, concentration, R&D, patents, law, economics

JEL Classification: K21, L1, L4, O3

Suggested Citation

Petit, Nicolas, Significant Impediment to Industry Innovation: A Novel Theory of Harm in EU Merger Control? (February 4, 2017). Available at SSRN: https://ssrn.com/abstract=2911597 or http://dx.doi.org/10.2139/ssrn.2911597

Nicolas Petit (Contact Author)

University of Liege - School of Law ( email )

B-4000 Liege
Belgium

International Center for Law & Economics (ICLE) ( email )

United States

HOME PAGE: http://www.laweconcenter.org/contact.html

University of South Australia - School of Law ( email )

GPO Box 2471
Adelaide SA 5001
Australia

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