Innovation Markets and Competition Analysis

Innovation Markets and Competition Analysis

EU Competition Law and US Antitrust Law

New Horizons in Competition Law and Economics series

Marcus Glader

This book examines the legal standards – and their underlying economic rationale – for the protection of competition in the innovation process, in both European competition law and American antitrust law.

Chapter 6: The cpmpetition assessment

Marcus Glader

Subjects: economics and finance, competition policy, law - academic, competition and antitrust law


6. The competition assessment This chapter deals with the conclusions regarding competition that might be drawn from analysing markets, actors, assets, technologies and conduct. It thereby touches the centre of the debate on the proper application of antitrust policy in innovative markets. In Microsoft III (D.C. Cir 2001), the company maintained that, regardless of the market structure, it did not behave like a monopolist since software competition is uniquely dynamic. Therefore the company suggested a new rule for this industry: that monopoly power should be proved directly by examining the company’s behaviour and not by structural evidence. But the Court of Appeals rejected Microsoft’s argument, stating that, even if the market happens to be uniquely dynamic in the long term, it is still correct to apply a structural approach in order to determine whether the company faces competition in the short term.1 The antitrust laws presumably mandate intervention to preserve competition in the short term, even if technological development and market forces in the long run would probably have reinstated competition. Nevertheless, caution is warranted in the application of static tools for protecting dynamic processes. In this chapter, the scope for anti-competitive effects of lessened competition in the innovation process will be investigated. Section 6.1 covers the assessment of different kinds of transactions at the various market levels outlined in section 5.2.2 Moreover, since transactions that relate to R&D are often associated with efficiencies, section 6.2 examines the role of efficiencies in relation to the innovation market concept. Efficiency...

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