Innovation Paradox in Merger Control (Book)

Dr. Gönenç Gürkaynak
1st Edition, November 2023

In his new book, Professor Gönenç Gürkaynak dissects the complex relationship between competition and innovation, and attempts to optimize intervention in merger control, advocating for a case-by-case analysis under certain principles explored in the book. He powerfully challenges presumptions in merger control, based on his analysis of 80 merger control decisions in three major jurisdictions, and exhaustive research on academic literature.

Innovation Paradox in Merger Control, written by Dr. Gönenç Gürkaynak, was published by Concurrences on November 22, 2023.

Table of Contents

• Author Biography
• Foreword
• Introduction
• List of Abbreviations
• Chapter 1 – Introduction
• 1.1 Defining the Question
• 1.2 Scope and Methodology
• 1.3 Reasoning
• 1.4 The Multiple Meanings of “Innovation”: An Introduction to the Concept in a Historical Perspective
• 1.4.1 Innovation in a Static Social and Economic Paradigm: Ancient Western World until the Renaissance
• 1.4.2 The In uence of Renaissance and Reformation
• 1.4.3 Constructing the Modern Concept of Innovation
• 1.4.4 Innovation and History of Intellectual Property Rights
• 1.4.5 Historical Progress of Development Economics and R&D
• 1.5 Conclusion
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• Chapter 2 – Understanding the Role of Innovation in Economic Growth and Competition Law
• 2.1 Introduction
• 2.2 The Broad Role of Innovation in Economic Growth
• 2.2.1 Schumpeter’s Innovation Theory
• 2.2.2 Innovation Forms and Evolution
• 2.2.3 Economics of Innovation and Intellectual Property Rights
• 2.2.4 Innovation – How to Measure It?
• 2.2.5 Effect of Innovations from an Economic Perspective
• 2.2.6 General-Purpose Technologies and Diffusion of Innovation
• 2.2.7 Factors Encouraging Innovation
• 2.2.8 GDP as the Link Between Innovation and Economic Growth
• 2.2.9 Expanding Competition, Innovation, and Economic Growth Through International Trade
• 2.3 The Role of Innovation in Competition Law
• 2.3.1 The Role of Innovation in Merger Control Regimes
• 2.3.2 The Role of Innovation in Cartel and Abuse of Dominance Investigations: Ex Ante and Ex Post Control
• 2.3.3 The Role of Innovation in the Digital Era
• 2.4 Conclusion
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• Chapter 3 – The Innovation Effects of Mergers: The Concepts and Theoretical Background
• 3.1 Introduction
• 3.2 Certain Competition Law Concepts in Merger Control
• 3.3 Basic Theoretical and Empirical Background on the Relationship Between Competition and Innovation
• 3.4 Innovation Concerns by Competition Enforcement Authorities in Merger Control
• 3.4.1 The Presumption that Horizontal Mergers Reduce Innovation Incentives
• 3.4.2 The (Changing) Presumption that Non-Horizontal Mergers Do Not Reduce Innovation Incentives
• 3.4.3 Main Factors Analyzed in Assessing Innovation Competition in Merger Control
• 3.4.4 Theoretical Literature In uencing the Innovation Concerns of Competition Authorities
• 3.5 Innovation Defenses by Applicant Entities in Merger Control: A Survey on Existing Arguments
• 3.5.1 Incentives to Innovate
• 3.5.2 Synergies and Efficiency Gains
• 3.5.3 Treatment of Demand-Side Efficiencies
• 3.5.4 Vertical Efficiencies
• 3.6 Potential Arguments for Innovation Defenses
• 3.6.1 No Presumption Should Be Accepted About the Effects of Mergers on Innovation Incentives
• 3.6.2 Market Definition and Innovation Spaces
• 3.6.3 Cannibalization Effects Should Be Balanced by Other Effects
• 3.6.4 Appropriability
• 3.6.5 Product-Market Competition and Contestability
• 3.6.6 Efficiencies
• 3.6.7 Broadened Application of R&D Projects and Innovation Sharing
• 3.6.8 Overcoming the Methodological Barriers
• 3.7 Conclusion
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• Chapter 4 – Innovation Considerations in¬ Merger¬Control in the European Union
• 4.1 Introduction
• 4.2 An Innovation-Centric Overview of European Merger Control Legislation
• 4.3 Approaching Innovation in EU Merger Control: The Debate, the Progress and the Focus Areas
• 4.3.1 Chasing Innovation: Definitions and Classifications
• 4.3.2 The Debate and its Re ection on the Enforcement Approach to Interactions of Innovation and Competition
• 4.4 The Commission’s Traditional Approach to Innovation in Merger Control
• 4.4.1 Ground Zero for Innovation Assessments: The Traditional Approach
• 4.4.2 Key Features of the Traditional Approach to Innovation in the Commission’s Precedents
• 4.5 The Gradual Transition to the Novel Theory
• 4.6 The Implementation of the Novel Approach in the Last Five Years
• 4.7 Conclusion
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• Chapter 5 – Innovation Considerations in the Merger Control Regime in the United Kingdom
• 5.1 Introduction
• 5.2 An Overview of the Merger Regime in the UK
• 5.3 Innovation Theory of Harm in the UK Merger Control Regime
• 5.4 Innovation Considerations by UK Competition Authorities: Case Review
• 5.4.1 Innovation Competition Between the Merger Parties
• 5.4.2 Dynamic Markets and the Ability and Incentive to Innovate
• 5.4.3 Online Platforms
• 5.5 What Does Brexit Entail for Innovation Considerations in the UK?
• 5.6 Conclusion
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• Chapter 6 – Innovation Considerations in MergerControl in the USA 229
• 6.1 Introduction
• 6.2 An Overview of the Framework for Evaluating Innovation Considerations in Merger Control in the United States
• 6.3 Innovation Considerations in Horizontal Mergers
• 6.4 Innovation Considerations in Non-Horizontal Mergers
• 6.5 The Significance of R&D in Specific Sectors: The Agencies’ Approach to Transactions in the Defense and Pharmaceutical Sectors
• 6.5.1. The Defense Sector
• 6.5.2. The Pharmaceuticals Sector
• 6.6 Innovation Concerns in Non-Merger Competition Cases
• 6.7 Conclusion
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• Chapter 7 – Creeping and Defensive Acquisitions in Digital Markets of Developed Economies
• 7.1 Introduction
• 7.2 Creeping and Defensive Acquisitions
• 7.3 General Overview of Digital Markets from a Competition Law Perspective
• 7.4 The Motivations Underlying Digital Conglomerate Mergers
• 7.5 Discussion on Notification Thresholds: Turnover or Transaction Value?
• 7.6 The Assessment of the Competitive Effects of Pre-emptive Mergers in Digital Markets
• 6.1. Pre-emptive Acquisitions and Kill Zones
• 6.2. Possible Methods in Merger Analysis
• 6.3. Discussions on the Need for an Updated Innovation Theory of Harm
• 6.4. Efficiency Considerations
• 6.5. Value-based Assessment of Pre-emptive Digital Mergers
• 7.7 Merger Control of Killer Acquisitions in the UK, EU and US
• The United Kingdom
• The European Union
• The United States
• Conclusion
• Annex-1
• The effect of COVID-19 and the post-pandemic era
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• Chapter 8 – Conclusion
• Bibliography