Reforming Merger Reviews to Preserve Creative Destruction
GAICIL Insights
The case for more aggressive merger review assumes that concentration is out of control and enforcement too lax. The report argues that neither is true.
It urges regulators to recognize that mergers can contribute to innovation, productivity and competition, a point that matters for AI, where acquisitions often fund and scale new capabilities.
Abstract
The neo-Brandeisian case for more aggressive merger reviews assumes that market concentration is out of control and enforcement has been too lax. Neither is true. Antitrust regulators should recognize that mergers can contribute to innovation, productivity, and competition.1
Conclusion
Claims that merger enforcement has declined significantly and that merger laws are inadequate to address current economic challenges are unsubstantiated. The FTC’s decision to withdraw the 2020 Vertical Merger Guidelines without specific guidance other than to embrace a return to a more formalistic, less economic approach to merger reviews may harm the process of creative destruction which inherently generates competitive rivalry. Also, the killer acquisition narrative largely fails to provide substantiating evidence even when that is the main rationale of a study, as illustrated by the FTC’s September 15, 2021 staff report on unreported acquisitions by large technology companies.
Consequently, efforts to significantly change merger law risk harming U.S. innovation, competitiveness, and economic growth. Rather than engaging in major structural changes of merger law, Congress should focus on more modest proposals that address the need to adjust merger policy without undermining the process of creative destruction that inherently drives most mergers. Contrary to current proposals, the recommendations we’ve articulated would modernize merger policy without stifling innovation and productivity growth.
Takeaway: Antitrust regulators should recognize that mergers can contribute to innovation, productivity, and competition.
Conclusion quoted verbatim from the report.
Notes
- Aurelien Portuese, Reforming Merger Reviews to Preserve Creative Destruction (Info. Tech. & Innovation Found., Sept. 27, 2021), https://itif.org/publications/2021/09/27/reforming-merger-reviews-preserve-creative-destruction/. Summary quoted verbatim from the ITIF publication page, https://itif.org/publications/2021/09/27/reforming-merger-reviews-preserve-creative-destruction/. ↩
Cite as: Aurelien Portuese, Reforming Merger Reviews to Preserve Creative Destruction (Info. Tech. & Innovation Found., Sept. 27, 2021), https://itif.org/publications/2021/09/27/reforming-merger-reviews-preserve-creative-destruction/
Header image: Construction crane in downtown Quebec City.jpg by Wilfredor, CC BY-SA 4.0, via Wikimedia Commons.
