Sustainability concerns in EU merger control: From output-maximising to polycentric innovation competition

This paper examines whether sustainability concerns play and should play any role in EU merger control. Sustainability concerns are currently cognizable as innovation-related issues as evidenced in Dow/Dupont and Bayer/Monsanto. In these cases, the Commission pioneered a novel approach aimed at predicting the impact of a merger not only on prices, but also on innovation competition. This theory of harm grounds in a rich conception of innovation and marks a tangible improvement in the current framework of analysis. Yet, it fails to give full effect to all competition-relevant sustainability concerns because of its exclusive focus on innovation capabilities, efforts and output. On this basis, we argue that innovation competition should not be understood only as an output-maximising device but also as a polycentric process under which independent decision-makers pursue various innovation paths. Such an approach puts an emphasis on the diversity, quality and direction of innovation and constitutes an alternative to the predominant output-centred understanding of innovation and a complement to the resources/capability-based analysis of innovation. To operationalise the notion of innovation competition as a polycentric process we explore four pathways: quality-related and sustainability-sensitive innovation metrics, indicators of industry-wide structural effects, a structural filter and ways to protect nascent competitors. Adding such an approach to the existing analytical framework would, arguably, enable the Commission to deal with all competition-relevant sustainability concerns.