The Increasing Cross-Border Importance of Innovation in Merger Review

Jennifer Fauver, Marsh & McLennan Companies - Washington, D.C. Office, Subbu Ramanarayanan, University of California, Los Angeles (UCLA) - Policy Area, and Nicola Tosini, NERA Economic Consulting explore The Increasing Cross-Border Importance of Innovation in Merger Review.

ABSTRACT: In this article, we discuss the specific economic mechanisms underlying how mergers might affect the merging parties’ incentives to innovate ex post. We then discuss these mechanisms in the context of several illustrative merger reviews and challenges brought by U.S. and EU antitrust authorities where concerns about innovation played a meaningful role in the agency’s decision to challenge the merger. And, finally, to provide specific guidance to antitrust practitioners on navigating agency investigations where innovation concerns may feature prominently, we discuss the evidence and analyses used by the antitrust agencies to assess innovation effects in recent merger reviews.