Last week we updated our CLIP of the month to an article on the theme of innovation, as considered through the lens of competition law. Pablo Ibanez Colomo’s article focuses on the identification of harm to innovation in competition cases (across the behavioural/merger spectrum). He distinguishes between cases where such analysis has been just one factor among many (referred to as cases where innovation considerations have had an “indirect” role), and cases where “direct” harm to innovation is central.
This academic contribution is timely, as innovation is now a topic at the forefront of debate in competition circles. Last month, Commissioner Vestager gave a speech addressing this topic head-on, in particular in relation to digital markets – the trend of favouring disruptive innovation over repeat innovation by an ‘incumbent’ remains evident.
DG Comp also focuses on innovation in its recently published Competition Merger Brief. The brief notes how innovation concerns have been key in mergers relating to industries as diverse as gas turbines (GE/Alstom) and biosimilar medicines (Pfizer/Hospira). The discussion of the Pfizer/Hospira merger decision (see p.12 of the Merger Brief) is likely to be of particular interest to readers of this blog, as it is the first case in which the Commission has engaged in detail with the markets for biological and biosimilar drugs, concluding that they belong in the same market, but observing considerable differences compared to the dynamic between originator and generic versions of small molecule medicines. (And for those with a deeper interest in this area, Bristows’ own 2015 Biotech Review carried an article (by two of the regular writers on this blog) looking at how innovation, in the form of competition between pipeline products, played a significant role in a couple of earlier mergers – see p.17.)
The current concern with innovation does not extend only to product innovation, but also encompasses changing business models – another subject which is a particularly hot topic at present – with the CMA’s Alex Chisholm having recently noted the fragility of such innovation, and the challenge of ensuring “an economic and regulatory environment in which new business models and consumer-friendly innovations can emerge and thrive”. It was this concern that late last year led the CMA to reject proposals from Transport for London that would have curtailed the advances made by Uber on London’s taxi scene.
We at the CLIP Board will continue to keep a weather eye on discussions of innovation and competition law – just click on the “innovation” tag on our home page to see more.