No issue has received more attention in antitrust circles in recent years than “killer acquisitions.” Arising from a blockbuster academic study identifying 5 to 7 percent of pharmaceutical transactions as having resulted in the “killing” of a new drug under development, attention has extended to other industries with particular focus on acquisitions in the technology sector. Calls for changes in the evidentiary standard for assessing such transactions are motivated by the concern that the potential harm from killer acquisitions in the technology sector is so great that it warrants an adjustment of the standards usually employed in potential competition cases.
In CPI Antitrust Chronicle, Isabel Tecu, Oliver Latham, and Nitika Bagaria analyze the the killer acquisition concern and get a quantitative sense for how many acquisitions by Google, Amazon, Facebook, and Apple (“GAFA”) display a fact pattern even remotely consistent with the killer acquisition narrative, and whether there are alternative potential competition concerns that could be of more frequent application.
Overall, killer acquisitions are best thought of as a rare, but high impact event, and mergers in fast-moving industries can generate broader potential competition concerns outside of this paradigm. The key policy question is then how to adapt our existing tools to properly police these transactions.
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