Innovation Markets and Competition Analysis - EU competition law and US antitrust law
Abstract: Innovation issues are increasingly highlighted in public policy, including competition policy. Not only is innovation a major factor behind economic growth in society, it is also increasingly shaping market conditions and affecting market participants’ behaviour. It therefore in various ways influences the legal analysis of markets and market practices. This dissertation examines the legal standards for the protection of competition in the innovation process in European competition law and American antitrust law. The legal frameworks are evaluated with regard to their underlying economic rationale. At the centre of the study is the innovation market concept. This concept entails the delineation, for purposes of antitrust analysis, of an upstream market for competing R&D. The innovation market analysis and its relationship to other tools for analysing the innovation process are investigated. Questions of market definition, the assessment of innovation competition in defined markets, the role of efficiencies in the appraisal of transactions and possible remedies to alleviate anticompetitive effects are explored. For this purpose a range of case law is reviewed which assesses whether a transaction or unilateral conduct would limit market participants’ incentives and abilities for continued innovation and future competition. Such analysis may be conducted at various levels. It may be part of assessing actual and potential competition in relation to existing product or technology markets. When existing markets do not adequately frame the analysis, e.g. where the relevant R&D is expected to result in radical innovation, the innovation market concept itself delimits the relevant market. Sometimes, a more general innovation analysis is conducted, based on a more broadly defined innovation market that is not confined to the development of specific future products or technologies. A variety of competitive effects can be appraised through a properly executed analysis of the competitive conditions in the innovation process. Identifying innovating firms and analysing their R&D-related assets and capabilities, undertaken R&D projects and the effects of entry barriers, may be key to drawing prospective conclusions – whether the primary effect relates to product innovation, variety or price. The constituent elements of a policy for conducting this kind of analysis are presented, summarising the conclusions and recommendations derived from the study.
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