Recognizing What’s Around the Corner: Merger Control, Capabilities, and the New Nature of Potential Competition
Abstract
This paper argues for a capabilities-based, forward-looking approach to merger control that reflects the realities of dynamic competition. In fast-evolving sectors, the most significant competitive threats often come not from current rivals but from de novo firms or adjacent firms developing complementary technologies or capabilities. Conventional antitrust tools — rooted in static market shares and product overlaps — fail to detect these latent challengers or assess the innovation potential of mergers. We draw on economic theory, executive insight, and case studies (Meta–Giphy, Adobe–Figma, Amazon–iRobot) to show how competitive uncertainty disciplines incumbents and how mergers can either suppress or amplify that dynamic. We propose a framework that shifts the focus from products to capabilities: assessing technological assets, organizational routines, and innovation trajectories. This approach reduces enforcement errors — both false positives and false negatives — and enables regulators to protect long-term rivalry without undermining legitimate adaptation to new technology and market shifts By recognizing unseen competition as a structural feature of dynamic markets, and by evaluating mergers through the lens of capabilities, agencies can better align merger control with the goal of promoting sustained innovation and longer-term consumer welfare.
Read the full piece at SSRN.