By C. Scott Hemphill(New York University) & Tim Wu (Columbia University)
A nascent competitor is a firm whose prospective innovation represents a serious, albeit uncertain, future threat to an incumbent. An incumbent’s acquisition or exclusion of such firms presents a challenge for antitrust law, because while nascent competitors often pose a uniquely potent threat to an entrenched incumbent, the firm’s eventual significance is uncertain, given the environment of rapid technological change in which such threats tend to arise. As we explain, nascent competition merits protection even where successful competitive entry is highly uncertain. In evaluating the incumbent’s conduct, evidence of intent, as revealed through testimony, documents, or conduct that would be unprofitable absent the elimination of a rival, takes on heightened importance.
Protecting nascent competition from anti-competitive acquisitions sometimes requires after-the-fact scrutiny of the transaction. There are costs to waiting but also benefits, including the revelation of critical information that was previously unavailable. Acquisitions by a dominant firm can be examined under ordinary merger law or instead as unlawful maintenance of monopoly, an approach that has several advantages. Ultimately, blocking anti-competitive acquisitions of nascent competitors is far from a general ban on deals between startups and incumbents. To the contrary, our suggested approach would discourage, at most, acquisition by the firm most threatened by a nascent rival.
Featured News
Dutch Regulator Fines Uber €10 Million for Privacy Violations
Jan 31, 2024 by
CPI
DOJ Investigates AI Competition, Eyes Microsoft’s OpenAI Deal: Bloomberg
Jan 31, 2024 by
CPI
Japanese Regulator Approves Korean Air’s Merger with Asiana Airlines
Jan 31, 2024 by
CPI
Netgear Files Antitrust Lawsuit Against Huawei Alleging Patent Misuse
Jan 31, 2024 by
CPI
Tennessee and Virginia Attorneys General Challenge NCAA’s NIL Rules in Federal Lawsuit
Jan 31, 2024 by
CPI
Antitrust Mix by CPI
Antitrust Chronicle® – The Rule(s) of Reason
Jan 29, 2024 by
CPI
Evolving the Rule of Reason for Legacy Business Conduct
Jan 29, 2024 by
CPI
The Object Identity
Jan 29, 2024 by
CPI
In Praise of Rules-Based Antitrust
Jan 29, 2024 by
CPI
The Future of State AG Antitrust Enforcement and Federal-State Cooperation
Jan 29, 2024 by
CPI