Killer Acquisitions: A Killer Story, But Still Not Much Evidence
Merger-control regimes around the world have for some time now engaged with the theory of harm known as “killer acquisitions.” The idea is simple: an incumbent buys a rival in order to shut down its operations and preempt future competition. Indeed, the original paper that laid out the theory found that 5-7% of mergers may qualify as killer acquisitions.
This thorough analysis of competition and innovation in the pharmaceutical industry led to an explosion of academic and policy interest around the world. But it is in digital markets, which were not covered by the initial empirical research, that the underlying ideas appear to have caught on most with policymakers.
But was this attention warranted? A new working paper, co-authored by one of the builders of the original idea, suggests otherwise.