Focus Areas:    agriculture | Antitrust | Innovation | Innovation Markets

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

Summary

A novel theory of harm is crystalising 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 in 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.

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