This paper is devoted to answering two questions. First, as to how the antitrust authorities should consider knowledge-based startups or the acquisition of young innovative firms. Second, what the current institutional challenges in this topic are. We looked at the antitrust theoretical debate and examined two recent merger cases of the ICT industry in the United States and in the European Union in order to extract insights about these questions. In addition, we briefly explored the Brazilian institutional framework to propose an agenda in terms of policies and academic research for this country. We sustain that market shares are not an accurate proxy for market power considering the possibility of being successful in terms of innovation strategies; they can be highly volatile or might not appropriately show the firm's potential in the process of
The emergence of a new techno-economic paradigm mainly based in the ICT technologies naturally have influenced the ongoing antitrust debate. This paper is devoted to answer two questions. First, how the antitrust authorities should consider knowledge-based startups or small companies acquisitions. Second, what are the current institutional challenges in this topic. Despite this discussion is not much explored in the literature, we looked at the antitrust theoretical debate and examined the recent merger cases in the United States and in the European Union in order to extract some insights about these questions. Also, we briefly explored some selected Brazilian recent cases to draw some policy and academic further agenda in this country. We can sustain that market shares are not an accurate proxy for market power considering the ability of succeed in innovation strategies; they can be highly volatile or cannot appropriately show the firm's potential in the competition for innovation. We see that there are important contributions to present general principles concerning the incentives to innovate post-merger. Nevertheless, they were designed to accomplish all kind of merger effects in innovation. For the startups or small firms case, we raised some issues to be addressed: the small or even non-existent market share and the importance of identifying the buyer and their changes in incentives to maintain the innovation path are some specificity that turns the analyses even more complex. There are relevant gap for the antitrust authorities, as the submission threshold are mainly based on companies revenues. The introduction of additional thresholds for the value of transaction may be a starting point. Keywords: antitrust / competition policy/startups / small enterprises / innovation / US / EU / Brazil RESUMO A emergência do novo paradigma tecno-econômico baseado nas TICs tem influenciado o debate antitruste. Este trabalho busca responder duas perguntas. Primeiro, como as autoridades antitruste deveriam considerar as aquisições de startups ou pequenas empresas de base tecnológica. Segundo, quais são os desafios institucionais
This article discusses the assessment of horizontal mergers and harm to innovation when there is innovation competition. The goal is to build a scheme for the proper choice of the framework of analysis, presenting, for each situation: mechanisms to identify innovation competition, to undertake market definition, to assess the competitive significance of firms, identification of the appropriate theories of harm and evidence. We review the literature on Competition Policy and on Economics of Innovation and take examples from the US and European case law. We also briefly discuss the strategic management literature to provide insights for the assessment. Considering post-merger reductions on innovation incentives as harm to innovation, we find differences of traditional merger procedure adequacy and challenges to build evidence, considering three faces of innovation, including possible combinations of these faces within a same merger case: (i) incremental innovation efforts in the product market, (ii) ongoing efforts for developing new products and (iii) future innovation efforts. When the traditional merger procedure is inadequate, we argue in favor of using a capabilities-based assessment, changing the step-by-step procedure.
Resumo: O tratamento da inovação é um tema ainda incipiente na política antitruste, em especial no âmbito da análise de fusões e aquisições. O objetivo desse trabalho é apresentar, sob o ponto de vista teórico e prático, o tratamento dos potenciais efeitos em inovações na análise de fusões e aquisições, para ao final poder apontar direções de aperfeiçoamento para a execução da Política Antitruste. Para isso, aborda as bases teóricas tradicionais e contribuições da teoria neoschumpeteriana sobre o tema, bem como levanta a literatura aplicada ao antitruste. Além disso, realiza uma breve análise das principais jurisdições e analisa três casos de fusões e aquisições que merecem destaques: Genzyme/Novazyme (2004), AT&T/T-Mobile (2011) e Microsoft/Skype (2011). Sem a pretensão de trazer conclusões definitivas, o texto conclui que não se pode lançar mão de uma hipótese rígida, que a priori determine o efeito de uma operação sobre as inovações no mercado: é preciso olhar as especificidades do caso. A análise de uma fusão ou aquisição na qual a inovação seja o foco da concorrência deve se concentrar em analisar as capacidades das firmas, a diversidade do mercado, bem como seus incentivos a inovar e pode se valer de tipologias como forma de referência para aplicação do enforcement. Os casos analisados e as experiências norte-americana e europeia reforçam as conclusões do trabalho e ilustram os desafios e as dificuldades impostas à análise. Palavras-chave: inovação, fusões e aquisições, atos de concentração, política de defesa da concorrência, antitrusteAbstract: The treatment of innovation is still an open theme of antitrust policy, particularly in the context of merger analysis. The aim of this study is to present, from a theoretical and practical perspective, the treatment of potential effects on innovations in merger control, and to be able in the end to point out directions of improvement for Competition Policy. In order to achieve this purpose, this thesis addresses the traditional backgrounds on the subject, as well as some contributions of the neoschumpeterian theory, and raises the literature applied to antitrust. In addition, it conducts a brief analysis of the key jurisdictions and analyzes three cases of mergers and acquisitions which deserve further discussions: Genzyme/Novazyme (2004), AT&T/T-Mobile (2011) and Microsoft/Skype (2011). Without intending to bring definitive conclusions, the text concludes that it is not possible to set a priori what would be the influence of a specific merger on the emergence of innovations: it is necessary to look at the specificities of the case. The analysis of a merger or acquisition in which innovation is the focus of competition should focus on analyzing the capacity of firms and the diversity of the market, its incentives to innovate, may use typologies as references for enforcement. The cases analyzed and the American and European experiences reinforce these conclusions of this paper and illustrate the challenges and difficulties imposed to the analysis.
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