In recent years, concerns about transactions in the pharmaceutical sector harming innovation and competition through the discontinuation of overlapping drug R&D projects, so-called “killer acquisitions”, have prompted regulatory action and research. The objective of this study is twofold. First, the “fact-finding” challenge aims at assessing the pervasiveness and characteristics of the phenomenon of killer acquisitions. Second, the “evaluation” challenge aims to examine the Commission’s past efforts to address potential killer acquisitions, and the legal framework guiding the Commission’s actions.
Under the fact-finding challenge, the study collects publicly available evidence on a large sample of transactions occurring in the period 2014-2018, seeking to determine whether any may have led to a potential killer acquisition. The study is novel in that it assesses not only mergers and acquisitions, but also other types of transactions such as licensing deals and R&D cooperation agreements. In addition, the fact finding assessment goes beyond a statistical assessment of the probability of killer acquisitions by applying an approach whereby an initial large-scale and automated analysis is followed by a qualitative, case-by-case examination.
Out of a total of 6,315 transactions that were identified in the pharmaceutical sector in the period 2014-2018, information on the remit of the deal was available for 3,193 transactions. Out of these, 240 transactions involved the acquisition of potentially substitutable drug R&D projects, conservatively based on a narrow definition of competitive overlap. A significant proportion thereof (89 out of 240, or 37% of transactions) were followed by the discontinuation of one of the overlapping drug R&D projects and warranting further scrutiny, in the sense that – based on publicly available data – there was no clearly identifiable technical or safety reason explaining the discontinuation in question.
Under the evaluation challenge, the study first analyses how well the Commission’s substantive merger assessment dealt with five notified concentrations in the pharmaceutical sector. It finds that the Commission correctly assessed the killer acquisition theories of harm in these cases, with a suggestion for potential improvement in the remedy design. Then, it analyses the suitability of the merger and antitrust tools to deal with killer acquisitions which are not notified to the Commission, by simulating Art. 22 EUMR and Art. 101/102 TFEU assessments in two case studies. Past experience and a legal assessment suggest that Art. 22 EUMR (for concentrations) and Art. 101/102 TFEU (for non-concentrations) are valuable tools (albeit with limitations) to address such killer acquisitions.
This paper presents a broad retrospective evaluation of mergers and merger decisions in markets dominated by multisided digital platforms. First, we document almost 300 acquisitions carried out by three major tech companies—Amazon, Facebook, and Google—between 2008 and 2018. We cluster target companies on their area of economic activity providing suggestive evidence on the strategies behind these mergers. Second, we discuss the features of digital markets that create new challenges for competition policy.
By using relevant case studies as illustrative examples, we discuss theories of harm that have been used or, alternatively, could have been formulated by authorities in these cases. Finally, we retrospectively examine two important merger cases, Facebook/Instagram and Google/Waze, providing a systematic assessment of the theories of harm considered by the UK competition authorities as well as evidence on the evolution of the market after the transactions were approved. We discuss whether the competition authority performed complete and careful analyses to foresee the competitive consequences of the investigated mergers and whether a more effective merger control regime can be achieved within the current legal framework.
The publication contributes to a better knowledge of the economic impact of this policy, which is essential for the good functioning of the internal market in the European Union. Competition authorities are increasingly interested in understanding the impact of their activities on markets and consumers. The goal is to improve competition policy rules and decision-making practices and to get robust evidence on the benefits of competition and competition policy for society as a whole. Discussions with competition authorities, practitioners and academics have shown the need to take stock of the experience gained in this field by the European Commission and to present it in an easily accessible way.
Paolo Buccirossi, Alessia Marrazzo and Salvatore Nava wrote two chapters concerning the T-Mobile/Orange UK Merger Case and the Telekomunikacja Polska Antitrust Case.
The paper analyzes the optimal design of competition law in Western Balkan countries. It first identifies the “policy choice set”, i.e. the essential variables that define a competition policy regime; then considers how the optimal choice within the available options depends on a number of characteristics and finally examines where the Western Balkan economies stand in terms of these characteristics. This comparison allowed the authors to derive policy implications on how competition policy in Western Balkan countries should be designed and implemented.
The study “Western Balkans and the Design of Effective Competition Law: The Role of Economic, Institutional and Cultural Characteristics” has been published by Springer in the book “Competition Authorities in South Eastern Europe”, edited by Boris Begović and Dušan V. Popović.
The report empirically investigates the causal effects of three decisions adopted by the European Commission on the performance of telecoms markets, namely the T-Mobile/Orange merger in the UK mobile markets, a state aid decision in the German fixed broadband market and an abuse of dominant position by Telekomunikacja Polska in the Polish fixed market. The report also provides a descriptive analysis on the evolution of competition policy enforcement in the telecoms markets and the concurrent trends in markets’ performance.
