Richard Gilbert, Apr 19, 2007
Several antitrust cases have involved allegations of anticompetitive innovation or product design and some plaintiffs and antitrust scholars have argued that investment in research and development that excludes competition can have predatory effects similar to predatory pricing. This article analyzes several tests for predatory innovation, including the rule of reason based on total and consumer welfare and profit sacrifice tests. All of these tests are likely to produce false positives that chill incentives for beneficial investments in research and development. Most courts that have considered allegations of anticompetitive innovation, including the appellate court in U.S. v. Microsoft, have concluded that innovation is not anticompetitive if it has plausible efficiencies. This is close to a test of whether innovation is a sham. While a sham test may fail to identify innovations that harm competition, that risk is acceptable given the high cost of penalizing beneficial innovation.
Links to Full Content
Featured News
DirecTV’s $9.75 Billion Dish Acquisition Hinges on Bondholder Agreement
Nov 13, 2024 by
CPI
Supreme Court Deliberates on Nvidia’s Bid to Halt Investor Lawsuit Over Cryptocurrency
Nov 13, 2024 by
CPI
Squire Patton Boggs Expands Antitrust Team with High-Profile Hires
Nov 13, 2024 by
CPI
Judge Rules Meta Must Face FTC Antitrust Trial Over Instagram, WhatsApp Acquisitions
Nov 13, 2024 by
CPI
Teresa Ribera Prepares to Tackle Big Tech and Green Growth as EU’s Next Antitrust Chief
Nov 12, 2024 by
CPI
Antitrust Mix by CPI
Antitrust Chronicle® – Remedies Revisited
Oct 30, 2024 by
CPI
Fixing the Fix: Updating Policy on Merger Remedies
Oct 30, 2024 by
CPI
Methodology Matters: The 2017 FTC Remedies Study
Oct 30, 2024 by
CPI
U.S. v. AT&T: Five Lessons for Vertical Merger Enforcement
Oct 30, 2024 by
CPI
The Search for Antitrust Remedies in Tech Leads Beyond Antitrust
Oct 30, 2024 by
CPI