ABSTRACT
This paper is devoted to answering two questions. First, as to how the antitrust authorities should consider knowledge-based startups or the acquisition of young innovative firms. Second, what the current institutional challenges in this topic are. We looked at the antitrust theoretical debate and examined two recent merger cases of the ICT industry in the United States and in the European Union in order to extract insights about these questions. In addition, we briefly explored the Brazilian institutional framework to propose an agenda in terms of policies and academic research for this country. We sustain that market shares are not an accurate proxy for market power considering the possibility of being successful in terms of innovation strategies; they can be highly volatile or might not appropriately show the firm’s potential in the process of competition by innovation. There are important contributions that present general principles concerning the incentives to innovate post-merger. Nevertheless, they were designed to encompass all kind of merger effects on innovation and still there are no well-defined procedures in the international or national scenario. Regarding startups and young firms, some issues are addressed: the small or even non-existent market share and the importance of identifying the buyer and their changes in incentives to maintain the innovation path are some characteristics that make the analyses even more complex. There are relevant gaps for the antitrust authorities, since submission thresholds are mainly based on companies’ revenues. The introduction of additional thresholds for the value of transaction and a better interaction between innovation and competition policies may be a starting point.
KEYWORDS:
antitrust; competition policy; startups; young enterprises; innovation
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