Are Anticompetitive Innovation Mergers Privately Profitable? An Exploratory Analysis

Posted by D. Daniel Sokol

Michael Cragg, The Brattle Group Daniel Gaynor, The Brattle Group and John David Simpson, The Brattle Group ask Are Anticompetitive Innovation Mergers Privately Profitable? An Exploratory Analysis.

ABSTRACT: A significant number of proposed mergers involve the combination of two of only a small set of firms capable of the type of drastic innovation that will create new products. A potential anti-competitive concern in such mergers is that the merged firm might terminate the innovative effort at one of the merging partners, thereby reducing competition to innovate. While preliminary, the results of this paper suggest that such an anticompetitive effect is unlikely in three to two mergers or higher.