Innovation

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* This piece was first published in the January 2018 issue of the Practical Lawyer (2018) PL (Comp. L) Jan 75

With the USD 130 billion merger between global agrochemical giants – Dow Chemicals and E. I. du Pont de Nemours and Company (DuPont) being granted a green chit by the European Commission (EC) and the Competition Commission of India (CCI), the significance of innovation in merger assessment has witnessed a renewed focus. The extent and role of innovation in the concerned market is one of the factors that antitrust regulators are required to consider while evaluating a proposed transaction. Ordinarily, this exercise is undertaken to study the impact of the transaction on future innovation and any competitive harm which may result from reduction in the incentives to innovate as also the pro-competitive outcomes emanating from operational synergies which enhance innovation.[1]

In the Dow/DuPont merger,[2] the relevance of innovation was discussed at length by the EC which observed that the merger would not only significantly impede competition in the pesticides and petrochemical industries, at a global level, but would also reduce future innovation in the global pesticides industry. It was noted that the development of effective and environment friendly pesticides required large scale investments and continuous research and development (R&D) and globally, only five players were engaged in R&D in the field of pesticides.[3] The Dow/DuPont merger therefore, would further consolidate market power in an already highly concentrated industry with significant entry barriers and would substantially reduce the parties’ incentives to innovate in the pesticides sector.Continue Reading Towards a New Jurisprudence: Role of Innovation in Merger Control

The nature of regulations, enforcement authorities and their ability to enforce regulations has been known to have a profound effect on innovation.

As the internet transforms industrial processes, regulators across sectors and geographies are trying to achieve the right balance on regulating innovation – enough so that it is under effective control yet not stifled from growing.

In a recent policy brief on behalf of the Penn Wharton Public Policy Initiative, Kevin Werbach, a professor at the Wharton School of the University of Pennsylvania, advises policy makers and regulators that the next stage of digital advancement will lead to a phenomenon that he calls “Internet of the World” – an intersection of the on-demand/sharing economy, the Internet of Things and Big Data. He suggests that this stage would represent “the final destruction of artificial divisions between real and virtual”.

As we approach this stage at a rapid pace, law-making and regulation needs to evolve accordingly. Laws need to reflect the rapidly blurring boundaries between the physical and digital so that regulators are suitably equipped to accomplish their tasks across all mediums and sectors.Continue Reading Emerging Trends in Market Power: An Update