Minority Share Acquisitions, Innovation and Competition – MINCOM

Merger control has traditionally been focusing on full mergers and acquisitions while acquisitions of minority shareholdings have been often deemed as harmless from the point of view of competition policy. Indeed, merger regulations do not apply in many countries when an acquisition does not give the acquirer control over the target firm. But even in countries in which merger control encompasses the right to review minority shareholding acquisitions, acquisitions, especially those deemed to be passive are either granted a de facto exemption from antitrust liability or have gone unchallenged (European Commission, 2016). However, there has been a growing interest in the competitive significance of minority shareholdings in rival firms recently. For instance, a 2014 European Commission (EC) white paper argues that “The Commission’s experience, the experiences of Member States and third countries, but also economic research show that in some instances the acquisition of a noncontrolling minority stake, such as one firm acquiring a 25 percent stake in a competitor, can harm competition and consumers” (EC, 2014). Nevertheless, compelling empirical evidence on the market effects of minority shareholdings is still lacking (EC, 2021). The aim of this project is to conduct two empirical studies in order to shed light on the competitive effects of minority share acquisitions. We will address the following research questions in two sub-projects:
1) Do horizontal minority share acquisitions in competitors foster or hamper innovation efforts of competitors?
2) How do firms react to cartel break-downs? Will they aim to re-establish a (more stable) cartel or at least to soften competition through increased acquisitions of minority shares in competitors?