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Competition Authorities Support Grasshoppers: Competition Law as a Threat to Innovation

Sir Robin Jacob, Dec 20, 2013

Aesop’s fable is of the ant and the grasshopper. In summer the ant works, gathering and storing food against the coming winter. !e grasshopper laughs and sings, living only for the day. Innovators are the ants: using part of the income of today to build for the future. Thee grasshoppers are those who look only for pro"ts for today and do not contribute to the future. Competition authorities are favouring grasshoppers, positively helping them sing in the summer (i.e. gather in profits now) and saying, “do not worry, sing away. When winter comes we will make the ants feed you.” The danger to innovation is all too obvious for those who can see: it pays to be a grasshopper rather than an ant better to be a copyist than an innovator.

I shall demonstrate this by reference to the competition authorities’ conduct in relation to two industries heavily dependent on innovation: pharma and telecoms. Let us recall some basics...

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