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Working Paper

Platform mergers and antitrust

This paper sets out a framework for addressing competition concerns arising from acquisitions in big platform ecosystems.

By: , and Date: January 26, 2021 Topic: Innovation & Competition Policy

Platform ecosystems rely on economies of scale, data-driven economies of scope, high-quality algorithmic systems and strong network effects that typically promote winner-take-most markets. Some platform firms have grown rapidly and their merger and acquisition strategies have been very important factors in their growth. Market dominance by big platforms has led to competition concerns that are difficult to assess with current merger policy tools. In this paper, we examine the acquisition strategies since their inception of the five major US firms – Google, Amazon, Facebook, Apple and Microsoft. We discuss the main merger and acquisition theories of harm that can restrict market competition and reduce consumer welfare. To address competition concerns arising from acquisitions in big platform ecosystems this paper sets out a four-step proposal that incorporates: (1) a new ex-ante regulatory framework, (2) an updating of the conditions under which the notification of mergers should be compulsory and the burden of proof should be reversed, (3) differential regulatory priorities in investigating horizontal versus vertical acquisitions, and (4) an updating of competition enforcement tools to increase visibility of market data and trends.

 

Recommended citation

Parker, G., G. Petropoulos and M. Van Alstyne (2021) ‘Platform mergers and antitrust, Working Paper 01/2021, Bruegel

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Blog Post

Regulating big tech: the Digital Markets Act

The European Union’s proposed Digital Markets Act will attempt to control online gatekeepers by subjecting them to a wider range of upfront constraints.

By: Julia Anderson and Mario Mariniello Topic: Innovation & Competition Policy Date: February 16, 2021
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Opinion

Regulation in the era of matchmaking economics

New approaches and new tools are needed to prevent excessive concentration of economic power in the hands of a few matchmaking digital platforms that form multi-sided markets. Regulation in this area is only just emerging.

By: Maria Demertzis Topic: European Macroeconomics & Governance Date: January 5, 2021
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Working Paper

Digital platforms and antitrust

The market power of online platforms raises concerns that they may engage in anti-competitive practices, but traditional (ex-post) antitrust intervention will be less effective in markets driven by network effects unless it is combined with a proper (ex-ante) regulatory framework. Intervention should not reduce value creation, should focus on fair sharing of value, and should eliminate incentives for anti-competitive strategies.

By: Geoffrey Parker, Georgios Petropoulos and Marshall Van Alstyne Topic: Innovation & Competition Policy Date: November 23, 2020
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Policy Contribution

Racing against COVID-19: a vaccines strategy for Europe

This Policy Contribution proposes a staged support scheme to tackle the COVID-19 vaccine challenge and a moon shot programme to meet the challenge of future pandemics.

By: Reinhilde Veugelers and Georg Zachmann Topic: Innovation & Competition Policy Date: April 21, 2020
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Book/Special report

A post-Brexit agreement for research and innovation

This report sets out what the Wellcome Trust and Bruegel have learned from a project to simulate a negotiation process between the UK and EU to create a post-Brexit research and innovation agreement. Our negotiating scenario assumed that the UK had left the EU with a withdrawal agreement, and that the negotiation was taking place during a ‘standstill’ transition period.

By: Michael Leigh, Beth Thompson and Reinhilde Veugelers Topic: European Macroeconomics & Governance, Innovation & Competition Policy Date: January 28, 2020