By Vincenzo Denicolo (University of Bologna) & Michele Polo (Bocconi University)
Abstract: In its recent decision on the Dow-DuPont case, the European Commission has adopted an innovation theory of harm (IToH), which holds that even horizontal mergers whose static effects are benign may be regarded as anticompetitive in a dynamic perspective, as mergers generally stifle innovation. This paper critically assesses the IToH, arguing that its theoretical foundations are too fragile to be the basis for radical policy changes. Antitrust authorities and the courts should continue to consider the impact of horizontal mergers on innovation, bearing in mind that the effect can go either way.