Neither Mergers nor Cartels: Innovation Networks and Competition Law

Organization theorists and innovation economists have been arguing for the past few decades that the locus of research and development activities has gradually moved away from vertically integrated firms to inter-firm alliances. In industries as diverse as construction and biotechnology, cooperation for innovation has given rise to collaborative forms of industrial organization varying from bilateral alliances to networks. Nonetheless, the EU competition law framework opens up limited space for inter-firm collaborations, cabined by the efficiency test of Article 101(3) TFEU and the requirements of the horizontal block exemption regulations. Building on this misfit, this article makes two contributions. First, a theoretical one, arguing that the law’s cautious approach to inter-firm collaboration is rooted in a binary vision of industrial organization which recognizes only firms and markets as modes of organizing production. Second, an explanatory one, showing how the 2023 Research & Development Block Exemption Regulation falls short of facilitating inter-firm collaborations for innovation and proposing fine-tuning suggestions.