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Merging Innovation into Antitrust Agency Enforcement of the Clayton Act

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  • Gilbert, Richard J
  • Greene, Hillary

Abstract

The treatment of innovation within the merger context by U.S. Antitrust Agencies continues to evolve, with regard to both general statements of enforcement policy and specific enforcement decisions. The respective merger guidelines issued by the Department of Justice and the Federal Trade Commission did not consider potential impacts on innovation or research and development until 1982, and then only in passing. By contrast, their joint 2010 Horizontal Merger Guidelines devote an entire section to innovation issues. This Essay examines both the frequency and manner with which the Antitrust Agencies invoke innovation-based concerns within their respective merger challenges from 2004-2014. It finds that both the DOJ and FTC allege adverse innovation effects in a very large fraction of their respective merger challenges in high-R&D-intensity industries. After exploring possible explanations, the Essay recommends that the Agencies describe their innovation concerns with greater specificity when merger challenges allege harm to innovation.

Suggested Citation

  • Gilbert, Richard J & Greene, Hillary, 2015. "Merging Innovation into Antitrust Agency Enforcement of the Clayton Act," Department of Economics, Working Paper Series qt8c68x088, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    • Handle: RePEc:cdl:econwp:qt8c68x088
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    Cited by:

    1. José Luis Moraga‐González & Evgenia Motchenkova & Saish Nevrekar, 2022. "Mergers and innovation portfolios," RAND Journal of Economics, RAND Corporation, vol. 53(4), pages 641-677, December.
    2. Rachel Griffith & John Van Reenen, 2021. "Product market competition, creative destruction and innovation," IFS Working Papers W21/43, Institute for Fiscal Studies.
    3. Gordon M. Phillips & Alexei Zhdanov, 2017. "Venture Capital Investments and Merger and Acquisition Activity Around the World," NBER Working Papers 24082, National Bureau of Economic Research, Inc.
    4. Gilbert, Richard J. & Katz, Michael L., 2022. "Dynamic merger policy and pre-merger product choice by an entrant," International Journal of Industrial Organization, Elsevier, vol. 81(C).
    5. Giulio Federico & Fiona Scott Morton & Carl Shapiro, 2020. "Antitrust and Innovation: Welcoming and Protecting Disruption," Innovation Policy and the Economy, University of Chicago Press, vol. 20(1), pages 125-190.
    6. Gordon M Phillips & Alexei Zhdanov, 2024. "Venture Capital Investments, Merger Activity, and Competition Laws around the World," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 13(2), pages 303-334.
    7. Federico, Giulio & Langus, Gregor & Valletti, Tommaso, 2018. "Reprint of: Horizontal mergers and product innovation," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 590-612.
    8. Jullien, Bruno & Lefouili, Yassine, 2018. "Horizontal Mergers and Innovation," CEPR Discussion Papers 12773, C.E.P.R. Discussion Papers.
    9. Richard J. Gilbert, 2019. "Competition, Mergers, and R&D Diversity," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 54(3), pages 465-484, May.
    10. Matthew S. Clancy & GianCarlo Moschini, 2017. "Intellectual Property Rights and the Ascent of Proprietary Innovation in Agriculture," Annual Review of Resource Economics, Annual Reviews, vol. 9(1), pages 53-74, October.
    11. Vives, Xavier, 2020. "Common ownership, market power, and innovation," International Journal of Industrial Organization, Elsevier, vol. 70(C).
    12. Haucap, Justus & Stiebale, Joel, 2016. "How mergers affect innovation: Theory and evidence from the pharmaceutical industry," DICE Discussion Papers 218, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    13. Federico, Giulio & Langus, Gregor & Valletti, Tommaso, 2018. "Horizontal mergers and product innovation," International Journal of Industrial Organization, Elsevier, vol. 59(C), pages 1-23.
    14. Benno Buehler & Daniel Coublucq & Cyril Hariton & Gregor Langus & Tommaso Valletti, 2017. "Recent Developments at DG Competition: 2016/2017," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 51(4), pages 397-422, December.
    15. Etro, Federico, 2019. "Mergers of complements and entry in innovative industries," International Journal of Industrial Organization, Elsevier, vol. 65(C), pages 302-326.
    16. Gilbert, Richard & Riis, Christian & Riis, Erlend S., 2018. "Stepwise innovation by an oligopoly," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 413-438.
    17. Sumit K. Majumdar, 2021. "Horizontal shareholding, technology, and compensation: An evaluation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(7), pages 1836-1848, October.
    18. Wesley Blundell & Kyle Wilson, 2023. "Acquisitions, product variety, and distribution in the U.S. craft beer industry," Economic Inquiry, Western Economic Association International, vol. 61(4), pages 1053-1076, October.

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