This presentation by Simonetta VEZZOSO, Associate Professor, Economics Department, University of Trento, was made during the discussion “Competition and Innovation - The Role of Innovation in Enforcement Cases” held at the 141st meeting of the OECD Competition Committee on 5 December 2023. More papers and presentations on the topic can be found out at oe.cd/rbci. This presentation was uploaded with the author’s consent.

1. Competition and Innovation:
Incorporating a More Dynamic
Perspective into Enforcement
Simonetta Vezzoso, Trento University
OECD Meeting of the Competition Committee
Paris, 5 December 2023

3. INCENTIVES/IMPACT BASED PERSPECTIVES ON INNOVATION:
3 COMMON INSIGHTS
 There are situations in which innovation is an important
dimension of rivalry between companies
 A long(er)-term perspective is necessary to apprehend innovation
 A long(er)-term perspective needs to deal with uncertainty

4. INCENTIVES-BASED IMPACT(EFFECTS)-BASED
rivalry in the product market driven by product or
process innovation
companies are competing through own innovation efforts
and innovation “management” (e.g., ecosystem)
Innovation concerns: reduction or a delay in the
introduction of new features of the products
Innovation concerns: changes to innovation levels and
intensity
incentives to innovate capabilities to innovate
Future product markets can be identified in a traditional
way (demand and supply substituability)
No clear outcomes from innovation (e.g., R&D) efforts
(e.g., SSNIP test unhelpful)
innovation mostly of incremental nature (more static
perspective)
Innovation mostly of disruptive nature (more dynamic
perspective)
Uncertainty: products have not yet entered the market
or potential outcomes from innovation are not clearly
identifiable
Uncertainty regarding future outcomes of innovation
efforts is very high
Theories of harm: profit –cannibalization narrative
(analogous to unilateral price effects); traditional
foreclosure theories “adapted” – innovation a variable
Theories of harm: direct impact on innovation of a
behaviour or a transaction (not as a consequence of a
reduction in competition)

5. ENFORCEMENT

6. EXAMPLES OF ENFORCEMENT CASES DEALING
WITH INNOVATION IN A PREDOMINANTY STATIC WAY
EU General Electric/Alstom (merger)
EU Pfizer/Hospira (merger)
US Mallinckrodt (unilateral conduct)
US Meta/Within (merger)
EU Illumina/Grail (merger)
Italy Google/Enel X (unilateral conduct)
EU Intel (unilateral conduct)
EU Novartis/GlaxoSmithKline (merger)
UK/EU Google/Waze (merger)
Brazil Bayer/Monsanto (merger)
US Bayer/Monsanto (merger)

7. EXAMPLES OF ENFORCEMENT CASES DEALING
WITH INNOVATION IN A MORE DYNAMIC WAY
EU Bayer Monsanto (merger)
EU Dow/DuPont (merger)
US Halliburton/Baker Hughes (merger)
US UnitedHealth Group/Change Healthcare (merger)
UK Illumina/Pacific Biosciences (merger)
US Plaid/Visa (merger)
EU Google Android (unilateral conduct)

8. MORE DYNAMIC APPROACH TO INNOVATION:
CHALLENGES AHEAD
Better conceptualize the relevant rivalry between companies as a process of innovation and knowledge
creation
Develop a better understanding of innovation capabilities: type of technology/knowledge production, specific
skills (e.g., AI talent), specialized assets, etc.
Better understand Innovation factors beyond capabilities: dynamic patterns, technological trajectories, etc.
Better assess the impact of innovation efforts on multiple sectors (e.g., digital) – cross-market
Make clear in the law that «market definition» is not necessary/can be done radically differently
Better understand innovation processes within ecosystems: production and appropriation mechanisms (both
incremental and disruptive innovation)
Need to consider concerns on the «quality» of the innovation - not only on innovation levels and intensity
(e.g., cooperation with data protection authorities, AI regulators, etc.)
Identify the types of evidence that capture the relevant innovation dimensions: portfolios of R&D activities,
commercial and licensing agreements with other companies, links to universities, participation to scientific
conferences, etc.

9. VERY PRACTICAL SUGGESTION ON
HOW TO FACE THE CHALLENGES
POSED BY THE MORE DYNAMIC
APPROACH TO INNOVATION
Competition regulators could facilitate the organisation of symposia,
seminars, and workshops that bring together economists (also from
non-orthodox economic Schools), management experts, behavioural
scientists, and technologists. These gatherings would provide a platform
for cross-disciplinary collaboration, offering diverse perspectives,
approaches, and knowledge to enhance the understanding of
innovation processes within particular industries and sectors, as well as
providing new assessment tools and methodologies.