Manager Mario Luca Explores How Mergers Impact Innovation in Concurrences
June 30, 2025
Antitrust authorities in the US and Europe are increasingly evaluating possible threats to innovation during merger review, especially for transactions involving nascent competitors. Guidelines from the Federal Trade Commission (FTC) and the US Department of Justice (DOJ), as well as the analysis framework followed by the European Commission (EC), explicitly identify innovation effects as important considerations when assessing mergers. However, research suggests that merger impacts on innovation are neither straightforward nor uniformly negative.
In an article published in Concurrences, Manager Mario Luca examines contextual factors that may influence mergers’ impact on innovation. In his article, Mr. Luca describes the economics literature on the effects of mergers on innovation, reviews concerns about the potential loss of innovation from “killer” and “reverse killer” acquisitions involving nascent competitors, and considers regulators’ views of arguments related to the harms and benefits to innovation that could arise from vertical mergers. He notes that there may not be a simple correlation between market concentration and innovation and observes the importance of considering case-specific factors when assessing how mergers could affect innovation. Those factors could include the nature of the relationship between the merging parties and any synergies or efficiencies that may impact the parties’ – or their competitors’ – incentive to innovate.