KluwerCompetitionLaw

Document information Digital Mergers: Evidence from the Venture Capital

Industry Suggests That Antitrust Intervention Might Be
Publication Needed
Journal of European Andrea Minuto Rizzo
Competition Law &
Practice (*)
Key Points
• There is evidence that venture capital first-time financings have decreased in areas
Jurisdiction where digital incumbents are active, indicating the possible existence of a kill zone.
European Union
United Kingdom • Despite persistent and significant returns above the cost of capital, the absence of
any significant entry in the digital sector is compatible with the exploitation of
market power.
• The existence of a possible kill zone might be determined by antitrust agencies’
Topics under-enforcement in relation to M&A.
Mergers • New theories of harm and enforcement approaches need to develop in a less rigidly
defined way to fill the existing gaps, taking better into consideration ex ante
incentives to innovate.
Bibliographic
reference I. Introduction
Andrea Minuto Rizzo, There is a growing debate around the possible existence of a kill zone, an area where
'Digital Mergers: Evidence venture capitalists would not finance start-ups because of the fear of both exclusionary
from the Venture Capital conduct and aggressive acquisition strategies by technology incumbents. Indeed,
Industry Suggests That evidence from the venture capital industry shows that the provision of first-time
Antitrust Intervention Might financings to start-ups is decreasing, not only as a general trend, but especially with
Be Needed', in Gianni de specific regard to the areas where digital incumbents are active. Moreover, companies
Stefano and Pablo Ibáñez are less able to go public through initial public offerings (IPOs), while sales through
Colomo (eds), Journal of mergers and acquisitions (M&As), especially to digital incumbents, constitute the most
European Competition Law relevant exit for investors.
& Practice, (© The More analysis is needed in relation not only to the reduction of venture-backed funding
Author(s); Oxford University in markets dominated by digital incumbents, but also to its possible explanations that go
Press 2021, Volume 12 Issue beyond antitrust infringements. Nevertheless, the persistent excess returns earned by
1) pp. 4 - 13 technology incumbents, coupled with the absence of any relevant entry, might point to
the actual exploitation of market power. The question then arises whether digital
markets are still able to self-correct and if innovation fully plays its constraining role.
In this context, the existence of a number of substantive obstacles that antitrust agencies
need to overcome before intervening might contribute to explaining the current de facto
laissez-faire approach to M&As. Specific concerns about the acquisition of young,
innovative start-ups by digital incumbents include the extent of the asymmetry of
information held by the agencies and the parties, as well as of the uncertainty concerning
the counterfactual scenario, and the ambiguous effects of more active antitrust
enforcement on ex ante incentives to innovate. On one hand, a more interventionist
approach could reduce the payoff for investors but, on the other hand, the current regime
could strengthen incumbents’ position to a level where their willingness to pay for future
innovations reduces significantly.
In this article, mainly drawing upon existing literature and antitrust agencies’ work, as
well as data from the venture capital industry, I suggest the need to investigate more in-
depth the existence and magnitude of the kill zone, as well as its possible causes,
adapting in the meantime traditional antitrust tools to fill the existing gaps. The
remainder of this article is organised as follows: Section II illustrates evidence from the
venture capital industry, especially in relation to the reduction of venture-backed
funding in markets dominated by digital incumbents, Section III describes its possible
causes that differ from competition law violations, Section IV why competition
enforcement might be needed, Section V concludes by highlighting possible policy
approaches.

II. Evidence from the venture capital industry

Venture capital is one of the most relevant inputs to innovation and consists of equity
investments in companies with innovative ideas which are characterised by a high growth
potential and associated risk. Venture capital firms raise capital by receiving the
necessary commitments from their investors. After fundraising, they invest across
different stages of the life cycle of the chosen companies (also target or portfolio
companies), which can be categorised as early or later-stage financing. In the early stage,
or seed stage, business angels are usually involved in the assessment and development

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 of an initial concept, whereas venture capitalists generally prefer to enter into play at
the successive commercialisation stage. Later-stage financings include funding for growth
and expansion of a company that is already more solid.
Beyond providing capital to scale up, venture capitalists share their experience and
network with entrepreneurs and tend to be involved in the management of their portfolio
companies. Considering the investment in highly uncertain products or services, which
have not yet been validated by users, the failure rate for venture-backed companies,
especially those at the early stage, is high. When the target company succeeds, venture
capitalists aim to exit their investment at the highest possible returns and within the
shortest possible period of time, through an IPO, if the company goes public, or a sale
through M&A if it remains private. Investors may favour IPOs since they often result in the
highest possible valuation, especially in positive financial market conditions. While
through an IPO the target company will remain independent, when the exit takes place
through a sale there is a high probability of the management of the portfolio company
losing its independence. (1) Accordingly, also from a competition angle, companies
accessing public financial markets may be preferable as they can raise capital to further
grow as an independent company that can provide an additional source of competition
to incumbents. In that regard, venture capital has played an important role in creating
independent public companies, closely linking the venture capital industry to the IPO
market. A study analysed the impact of venture-backed companies on IPOs, finding that
of all the US companies that went public between 1974 and 2014, 42% were venture-
backed. (2)
Despite experiencing a consistent reduction in recent years (3) , the US venture capital
sector still dominates the global stage. It has participated in the creation of some of the
most valuable companies in the world. At the end of 2019, venture-backed companies
accounted for the five largest publicly traded companies by market capitalisation in the
United States, namely Apple, Microsoft, Alphabet, Amazon and Facebook.

A. The investment side

Taking a closer look at the US data (4) , venture capital firms’ investments have in recent
years benefited from a robust growth of deal value, coupled with a decline in the volume
of deals. (5) The observed growth of deal value is mainly driven by an increase in larger
and later-stage deals, to the benefit of more mature companies. Consequently, despite
the fact that capital funding flows reached record heights in 2018, the venture capital
invested is increasingly concentrated in the hands of less bigger players. (6)
More specifically, first of all, there is a trend of fewer companies receiving capital as well
as of a reduced number of deals closed. Relative to the peak reached in 2015, fewer
companies received capital and a lower number of deals was closed in 2018. This
reduction in the total volume of deals has been driven by the angel/seed stage (7) , as
opposed to early and later stages that experienced modest growth. (8) Moving to deal
value, the early/seed stage is, again, the only category to experience a drop. (9)
Secondly, the fewer companies receiving capital are larger. Venture-backed companies
valued at one billion dollars or more, so-called unicorns, raised a consistent part of
funding. Indeed, from 2006 to 2018, the unicorns’ share of the total deal value increased
more than eight times reaching 35% of total capital invested. (10) This trend indicates a
shift towards investments taking place at a later stage, when companies have already
reached high valuations.
Thirdly, a lower number of start-ups receive a higher average amount of funding. Even
though the value of first-time financings, consisting of the first round of equity funding in
a start-up by an institutional venture investor, hit a 15-year peak in 2018, the number of
first-time financings, in terms of company counts, reached in the same year its lowest
number since 2011. (11)
Lastly, to see the full picture, these increased absolute figures in terms of deal value
concerning first-time financings have to be seen in perspective by comparing them, in
relative terms, to the evolution of follow-on financings, which provide additional funding
as the company grows. The gap between the former and the latter has increased
considerably, especially in terms of deal value, as in 2018 follow-on rounds amounted to
nearly 12 times the capital invested in first-time financings, a 15-year high. (12)
In the wider context outlined above, technology companies constitute a substantial part
of venture capital funding, with software continuing to attract ‘the lion share’ of
investments. (13) More specifically, technology has the ability to attract more venture
capital relative to public listed companies considered all together. (14)
Recent analysis has pointed to the existence of a kill zone in relation to the decline of
venture capital investments, and thus of new entry, in areas where the major digital
platforms are active or make large acquisitions.
More specifically, Ian Hathaway (2018) (15) shows that first-time financings recently
drastically contracted, compared to similar technology sectors, in the categories where
Amazon, Facebook and Google are active. (16) Based on the measures considered by the
author, in the five years from 2012 to 2017, the number of venture capital first-time
financings received by start-ups active in the industries where these digital platforms are

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 active consistently and persistently declined relative to comparable categories. (17) Such
evidence is consistent with the hypothesis that venture capital firms are not willing to
fund new businesses in this space.
Moreover, a study conducted by the consulting firm Oliver Wyman, commissioned by
Facebook, highlights that the overall decline in the number of deals, considering the
global venture investment market, has been driven by the technology market. More
specifically, the number of deals in technology has recently declined, while other sectors
have grown, highlighting a diverging trend. (18)
Furthermore, an article by Zingales et al. (19) counter-intuitively highlights changes in
investment in start-ups by venture capital firms after major acquisitions by Facebook
and Google. In particular, there is evidence of a reduction of 46% and 42%, respectively,
in the value and number of deals in the same space of the target company in the three
years following the acquisition. (20)
To conclude, decentralised technologies, such as cryptocurrencies and blockchain (21) ,
appear to be relatively open to innovative new entrants, as opposed to artificial
intelligence that is still dominated by centralised digital platforms and where it is
difficult to expect a successful IPO. (22) In that regard, for example, Google states that
‘machine learning and artificial intelligence (AI) are increasingly driving many of our latest
innovations’. (23)

B. The exit side

Moving to exits, venture capital firms may monetize their equity stake, if the start-up
they have invested in is successful, through an IPO or a sale. In recent years, the number
of US IPOs has decreased consistently (24) , especially for what concerns small and
medium-sized enterprises. (25) In this context, M&As play a relevant role, accounting for
the large majority of venture-backed exits. (26)
Software companies accounted for the majority of disclosed sales by deal value. (27) As
the analysis below indicates (28) , digital incumbents can be considered at least as
particularly active acquirers of technology start-ups. More specifically, Google, Amazon,
Facebook, Apple and Microsoft (GAFAM) have gone through a significant number of
sequential yearly acquisitions, amounting overall to 44.9 deals on average in each of the
10 years considered. (29) The average value of disclosed deals below one billion dollars
amounts, over the period considered, to 204 million dollars. (30) At the same time, GAFAM
implemented larger deals where strategically attractive, making, overall, 23 acquisitions
above one billion dollars amounting to a total expense of around 141 billion dollars. (31)
Lastly, acquisitions target young companies spanning a wide range of economic sectors,
whose products and services are often complementary to those of the acquirer. (32)

III. Is the gun actually smoking?

In recent years, a debate about the possible existence of a kill zone around technology
incumbents has gone beyond venture capital circles to involve a broader audience. (33)
In the kill zone, incumbents allegedly have both the ability and the incentive to foreclose
promising potential competitors. Their position allows them to collect large amounts of
data and to identify emerging trends early and to react to them, whether by adopting
aggressive exclusionary practices to protect their core market or by pre-emptive
acquisitions of innovative start-ups at generous multiples. (34) Exclusionary conduct and
acquisitions may actually be complementary strategies, rather than substitutive ones, as
the former may allow the incumbent to reduce the acquisition price. (35)
Despite the growing concern that the possible existence of a kill zone might negatively
impact innovation, the venture capital industry itself has diverse views about the need to
increase antitrust scrutiny against large digital incumbents changing the current
approach to M&As. In particular, among the venture capitalists that have actively
engaged with US antitrust enforcers (36) , even those that acknowledge the existence of a
problem at the same time express their fears for the possible unintended consequences
of changes introduced with the best of intentions. Tackling incentives to innovate in the
digital sector represents a multifaceted phenomenon, where the opposing sides are
nevertheless part of the same coin. On one hand, venture capital has so far greatly
contributed to the transformation of high-risk start-ups into fully fledged independent
companies, participating in the creation of the most valuable public companies globally.
Moreover, start-ups benefit in many ways from the ecosystems created by large
technology incumbents, among others, by using their platforms as effective distribution
channels. Furthermore, the incumbents might simply offer a better product or service. On
the other hand, however, there seems to be evidence, on the investment side,
highlighting a possible reduction of venture-backed start-ups operating in the same
space where digital incumbents are active. As stated during these debates ‘funds have a
limited size and they have to allocate capital and they would much rather pursue a market
that has tailwinds behind it as opposed to a market that has matured and that has deep
entrenched incumbents’. (37) In markets dominated by incumbents, ‘(…) start-ups building
superior products (…) may also find it difficult to secure VC investment’. (38) In addition,
some venture capitalists have expressed their views that competition to digital

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 incumbents might likely arise from adjacent markets. A ‘viral’ success in a separate
vertical could, as it grows, spill into the core market of a dominant player. These adjacent
markets might be an area where antitrust agencies could focus more.
Some of the evidence described in the previous section is consistent with the existence
of reduced first-time venture-backed funding in markets dominated by digital
incumbents. Despite the evidence still being limited, it nevertheless provides suggestive
food for thought and should trigger more detailed research on this complex topic. First of
all, the existence and the magnitude of this reduction have to be further verified, for
example, through a precise identification of the companies actually competing in the
same space of digital incumbents and their evolution. The second step should then verify
the existence of a causal link between the alleged aggressive behaviour of the
incumbents in the kill zone and the reduction of venture capital financings, especially in
the early stages of start-ups.
This reduction might, indeed, not necessarily pertain to the antitrust domain as it could
stem from changing requirements of start-ups themselves as their technological and
commercial needs evolve. The widespread ‘blitzscaling’ (39) strategy—where start-ups
enter a digital niche with a narrow focus then gradually expanding—has been made
possible by developments—such as the advent of smartphones, social media and cloud
computing (40) —that allow for global reach and scalability (41) at almost no initial
technological cost, while marketing and human capital budgets may be on the rise at
successive stages of the start-ups’ development. (42)
Moreover, changes have taken place also in the investment industry landscape through
an expansion of the types of capital provided. Among others, non-traditional newer
investors and sovereign wealth funds have invested in later-stage companies. (43)
Lastly, as for the exits through a sale, generous acquisitions might, as well, reflect
prospective efficiencies deriving from the synergies between the acquirer and the
acquired start-up.
However, the evidence thus far collected does suggest that current digital incumbents
face very little threat of entry. Competition for the market dynamics are not necessarily
symptomatic of the presence of the exploitation of market power, provided that
incumbents still face, actual or potential, competitive pressures and could be
substituted by a more efficient rival. (44) What is needed is not just incremental
innovation, but the drastic innovation that makes market leadership highly contestable.
This is especially true for technology markets, where, as stated by Google itself, ‘changes
tend to be revolutionary, not evolutionary’. (45)
Some recent studies and antitrust agency reports suggest that digital markets are
becoming progressively less dynamic. Among others, the UK’s Digital Competition Expert
Panel (UK Report (46) ) observes that competition for the market does not appear to be
able to solve competition issues linked to winner-take-all outcomes, as the next
technological revolution is likely to focus on data that existing firms control to a large
extent and that successful new entrants are generally acquired by incumbents.
Moreover, Organisation for Economic Co-operation and Development (OECD) research
suggests that, in digital-intensive sectors, mark-ups are increasingly higher (47) while the
decline in business dynamism occurs faster than in other sectors of the economy. (48)
As highlighted by the Stigler report (49) , key players in the digital industry remained the
same over the last two technology waves, staying dominant through the shift to mobile
and the rise of artificial intelligence, without significant impact on market share or profit
margins.
Lastly, worrying evidence emerges also from the application of profitability analysis to
digital incumbents. High profits substantially and persistently above the cost of capital
(50) could signal that the market is not functioning properly, as in the long term, return on
investment should equal the cost of capital. In that regard, the UK’s Competition and
Markets Authority (CMA) has found, in the context of the sector enquiry into online
platforms and digital advertising (51) , that the return on capital employed (ROCE) of
Google and Facebook has been well above any reasonable estimate of a competitive
benchmark for many years. In 2018, the estimated cost of capital for both Google and
Facebook was around 9%, compared to actual returns on capital of over 40% for Google
and around 50% for Facebook. Even though these results have to be interpreted with
caution (52) , they seem to indicate that digital platforms are not facing the threat of
entry and this evidence is consistent with the actual exploitation of market power.
Schumpeter (53) highlighted the prospect of new competition and innovation as
incessantly playing a key role in fostering dynamic competition and economic efficiency.
The evidence so far described may indicate that this impulse for creative destruction is
fading in digital markets.

IV. What can antitrust do?

The consistent stream of yearly ‘small’ acquisitions below one billion dollars by digital
incumbents, coupled with a lower number of more significant deals when appropriate,
does not necessarily imply on its own a weakening of competition. In many cases

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 acquisition of promising start-ups by large digital firms are pro-competitive being driven
by efficiency motives, the large firms bringing skills and financial resources that are
complementary to the innovation developed by start-ups.
As a policy objective, antitrust agencies should assure that a potential new entrant with a
superior technology may grow as an independent company in the kill zone or in adjacent
markets. In that regard, antitrust agencies have been in recent years more active in
relation to conduct cases, especially in Europe. (54) However, when assessing M&As in the
digital sector, antitrust authorities may have placed too much weight on the risk of
condemning false positives compared to the opposite risk of clearing false negatives. To
date, the former risk has not materialised as all digital mergers have so far been
authorised. At the same time, it is possible that some transactions have been wrongly
cleared. In that context, the increased acquired knowledge of the nature of competition
in digital markets is leading to a broader awareness that also the risks of not intervening
when needed can be particularly costly. Indeed, it is no less harmful to wrongly clear an
anticompetitive practice than to condemn an efficient one, as false negatives will not
necessarily self-correct over time. (55) Once a specific digital market has tipped in favour
of the incumbent it is particularly hard to reverse that market outcome.
Before moving to a more interventionist approach, in search of a more appropriate
balance between the risk of under-enforcement and the one of over-enforcement,
antitrust agencies need to tackle some specific complex substantive issues.
Firstly, to address the asymmetry of information held by the agencies and the parties,
there seems to be a growing convergence (56) on the possibility to reverse the burden of
proof in relation to the acquisition of start-ups in specific circumstances, introducing a
rebuttable presumption of anticompetitiveness. Under this framework of analysis, if the
acquirer does not provide evidence that the expected efficiency gains countervail
competitive harm, the merger would not be authorised. Reducing the cost of information
collection, this approach should help minimise false negatives.
In particular, the report delivered by the experts appointed by the European Commission
(EC Report) proposes intervening, in a limited set of circumstances when the strategic
relevance of acquisitions shields the incumbent’s broader ecosystem from competitive
threats from the fringe, applying a new theory of harm and reversing the burden of proof.
(57) More specifically, this approach would apply to acquisitions by already dominant
platforms or ecosystems, in a context characterised by strong network effects possibly
reinforced by data-driven feedback loops, of early-stage small, but successful, innovative
start-ups with a quickly growing user base and significant competitive potential,
especially if there is a systematic pattern of such acquisitions.
The EC Report has identified a gap in currently accepted theories of harm, suggesting
that those related to the elimination of actual (58) and potential horizontal competition
(59) , as well as of innovation competition (60) , are hard to apply in the specific context
described above. Moreover, killer acquisitions are not considered the typical scenario in
the digital sector. (61) Lastly, if these acquisitions were to be considered as conglomerate
(62) , between complementary or unrelated businesses, they would generally be
considered as less likely to raise competition concerns, being more able to provide
efficiencies. To fill this gap in currently accepted theories of harm, the EC Report suggests
that conglomerate mergers should be analysed as if they were horizontal. More
specifically, competition authorities should inquire whether the merging parties operate
in the same ‘technological space’ or ‘users’ space’ that encompasses a broad variety of
user needs. Furthermore, the parties should bear the burden of proof, demonstrating that
merger specific efficiencies are higher than the loss of competition.
Also, Bourrreau and de Streel propose attributing to the acquirer the burden of proof to
demonstrate that it will not discontinue the target’s innovation, or commit to not doing it,
in the very specific situation where there exists a cannibalisation effect between the
target’s and the acquirer’s products or services and there is a risk of the acquirer
discontinuing the potential innovation. In the absence of a convincing explanation, or of
a commitment not to discontinue the target’s innovation, the merger should be
prohibited. (63)
Valletti as well has proposed introducing, in some merger settings, for instance when the
acquirer is ‘super dominant’, a presumption that the merger is harmful, shifting the
burden of proof to the parties for an efficiency defence. (64)
Amelia Fletcher considers that reversing the burden of proof in relation to all digital
markets might be a step too far, as it could dampen excessively the role played by
efficiencies. At the same time, she argues that the huge amount of uncertainties
surrounding the assessment of the counterfactual scenario when the acquired firm is a
start-up firm should be recognised. Accordingly, she considers as an option the
possibility to find a half-way solution where, before shifting the burden of proof to the
parties, an agency should nevertheless demonstrate a reasonable prospect of harm. (65)
Secondly, the assessment of the acquisition of nascent firms might represent a challenge
in terms of the definition of an adequate counterfactual. It is an inherently forward-
looking exercise, especially in dynamic markets, where the past may not be a reliable
indicator of the future. The development of the target’s product remains highly uncertain

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 and agencies may have to identify multiple scenarios, assigning probabilities. (66) In that
regard, the UK Report (67) proposes broadening the standard merger test, in addition to
the substantial lessening of competition, implementing a ‘balance of harms’ approach
that would not only consider the likelihood of harm occurring, but also the possible
magnitude of the anticompetitive effects if harm actually occurs. In reviewing merger
decisions involving potential competition and harm to innovation, the application of the
envisaged test would lead to interventions also in situations where the risk of harm is low,
but the magnitude of harm is high. (68)
Thirdly, antitrust agencies have to face the ambiguous effects that more active antitrust
enforcement might have on ex ante incentives to innovate. If, on one hand, a more
interventionist approach could reduce the payoff for investors, on the other hand, some
recent work suggests that the current de facto laissez-faire regime to merger assessment
could have detrimental effects on innovation.
A specific M&A may have negative or positive effects on the incentives to innovate of the
parties. In markets where innovation is an important competitive force, effective
dynamic competition may be unilaterally hindered by a merger between two important
innovators or where even a firm with a limited market share has promising pipeline
products. (69) But also pro-competitive dynamic efficiencies could arise if firms,
following the transaction, are able to internalise spillover effects and raise the return on
investment of R&D, thereby increasing their innovation incentives. (70)
How to deal with the effects of M&A activity on the incentives to innovate of future
venture-backed companies is even more complex. Intuitively, the possibility for venture
capitalists to exit their investment through a sale might have a positive impact on ex
ante innovation incentives. As observed by the UK Report ‘being acquired is also an
important exit strategy for technology start-ups, providing significant incentive for
investors to provide funding to risky projects and support market entry’ (71) , Amelia
Fletcher ‘the ability to sell out to a large platform may be one of the drivers behind a firm
starting up in the first place and also one of the reasons why it is able to access venture
capital’ (72) , as well as the EC Report (73) ‘(…) the chance for start-ups to be acquired by
larger companies is an important element of venture capital markets: it is among the main
exit routes for investors and it provides an incentive for the private financing of high-risk
innovation’. Accordingly, if a new entrant has the expectation of entering the market in
order to be bought, it should position its products or services precisely in the
incumbents’ kill zone. (74)
However, some recent works question the existence of such a possible positive dynamic
effect of the acquisitions of start-ups by digital incumbents on ex ante incentives to
innovate of future start-ups. In the long term, the monopoly position acquired by the
incumbents would, indeed, reduce their willingness to pay for new acquisitions,
negatively impacting innovation.
In that regard, Bryan and Hovenkamp (75) argue that leading incumbents make
acquisitions partially to keep rivals from catching up technologically. When start-ups can
choose what technology they invent, they are biassed towards innovations that improve
the leader’s technology rather than those which help rivals improve. Furthermore, upon
becoming sufficiently dominant, the leading incumbent’s marginal willingness to pay for
new technologies falls abruptly. (76) Incentives for prospective start-ups to innovate are
thus weakened. Against this scenario, the authors propose abandoning the current de
facto laissez-faire regime in favour of expanded, albeit limited, antitrust intervention
concerning start-up acquisitions by dominant incumbents in situations where the
acquirer enjoys market power, the start-up technology is commercially significant and
may impact competition if used exclusively by the acquirer, and the acquirer in past
similar acquisitions has not licensed the acquired technology to rivals. Antitrust
enforcement would introduce a compulsory licensing requirement that should mitigate
the static exclusion concern, as the incumbents’ rivals will have access to the same
technology, maintaining at the same time stronger innovation incentives over time as,
provided the incumbent does not become a pure monopolist, the ex ante incentives to
innovate will be higher than in the laissez-faire environment. Under laissez faire, indeed,
start-ups receive in the short term the largest payouts for inventions that widen the
technology gap, favouring the incumbent while, in the longer term, when the leader
becomes a pure monopolist, its marginal willingness to pay for a technological
improvement reduces significantly. In the authors’ approach, the improvements
stemming from their proposal hold true if the incumbent does not obtain a pure
monopoly, highlighting the importance of keeping digital markets contestable.
In addition, Zingales et al. show as well that incumbents’ acquisitions may reduce the ex
ante incentives to innovate, but at the same time the authors highlight that these
transactions might increase ex post efficiency. The two arguments go in opposite
directions determining a trade-off that needs to be solved by antitrust agencies when
assessing a specific deal. In particular, without any limitation on acquisitions by
incumbents, especially when markets present network externalities and switching costs,
early adopters will be reluctant to switch to new entrants, even when these are
technologically superior. Indeed, they expect that new social media would be acquired
by the incumbent, which will incorporate all the new desirable features. This reluctance
might severely reduce the market price at which these new entrants will be acquired,

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 discouraging future new entry. Counter-intuitively, acquisitions of entrants by dominant
platforms would not necessarily stimulate more innovation, as—anticipating reduced
future payoffs—venture capital investment in the kill zone would be difficult to obtain.
(77) However, clearing the merger might generate efficiencies as the market would
consolidate and network externalities would achieve their full potential, letting
customers broadly enjoy a superior technology. Differently, if large incumbents were
prevented by regulation from acquiring new platforms operating in a similar space, the
opposite scenario would take place; ex post efficiency would be sacrificed to the benefit
of ex ante incentives to innovate. As solving this trade-off case-by-case would probably
lead to the authorization of all acquisitions, considering that positive ex post efficiency
considerations at the single case level would prevail over alleged negative impacts on ex
ante incentives to innovate (78) , the authors propose not intervening through changes to
the M&As assessment regime but to enhance other ex ante regulatory policy measures.
They suggest, among other options, mandating a common Application Programming
Interface to promote interoperability across platforms, reducing the incumbency
advantage deriving from network externalities and switching costs, thus favouring market
contestability.
Both articles rightly propose focusing on the effects of M&A activity on future venture-
backed companies highlighting the negative dynamic effects of the current de facto
laissez-faire regime on ex ante incentives to innovate. Moreover, despite proposing
different policy options, the articles converge on the need to preserve market
contestability.

V. Conclusion
In relation to acquisitions by digital incumbents, there is a wide convergence on the need
to do more, less on how to do it, as it is not straightforward to move from suggestions to
policy considerations. A presumption against all transactions by leading technology firms
would not be proportionate. At the same time, a minority of them risks not being
beneficial to consumers and continuing the current de facto laissez faire might not be
optimal. (79) Finding a solution between these extremes appears to be complicated,
especially because of the still uncertain effects that a more interventionist approach
could have on ex ante incentives to innovate.
Different types of mergers—horizontal, vertical, conglomerate—involve different theories
of harm and efficiency justifications. Most of the transactions previously discussed do not
have an immediate horizontal nature even if it is plausible that the target firms evolve
into the core market of the dominant acquirer. Moreover, existing theories of harm may
not reflect the complexity of existing business models, as relationships between
undertakings may be both of complementarity and substitution. To tackle these
challenges a less rigidly defined approach is needed, filling the gaps where necessary, as
suggested by the EC Report. New theories of harm to adapt antitrust tools to changing
market conditions, and better incorporating ex ante incentives to innovate beyond short-
term effects of M&As, will need to be tested in the courts, through a trial-and-error path
that risks identifying false positives along the way. (80)
In parallel, moving from an ex ante to an ex post approach in the assessment of M&As,
which is already possible in some jurisdictions (81) , might prove helpful. Even if this
could reduce legal certainty and a possible successive demerger might be difficult to be
implemented, agencies’ analysis would be less speculative as more information
concerning the actual effects of an acquisition would be available. Moreover, at least in
the US, there is an increasing possibility that systematic acquisitions by digital
incumbents could be considered as an anticompetitive monopolisation, especially if the
intent and effect of limiting potential entrants could be proved, with far-reaching
consequences. (82)
Complementarily to antitrust intervention, there may be a need to resort to ex ante
regulation, especially to favour market contestability. A debate is ongoing concerning the
potential need for regulatory interventions restricting platforms’ ability to favour their
downstream activity. (83) The CMA’s market study on online platforms and digital
advertising supports, in general, pro-competitive ex ante regulation and identifies a wide
range of potential remedies to address market contestability especially with regard to
search engines and social networks such as, respectively, third-party access to click and
query data and mandated interoperability over particular forms of functionality. (84) The
EC has announced a three-pillar structure of complementary measures that include the
introduction of ex ante rules. (85) As always, before adopting specific ex ante regulatory
measures, proper market failures should be identified in order not to let the solution
become part of the problem.

References

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© 2024 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 *) Andrea Minuto Rizzo is Head of International Affairs at the Italian Competition
Authority. The views expressed in this paper are those of the author and do not
necessarily reflect the views of the Italian Competition Authority. There are no
sources of funding or ongoing relationships with interested parties to disclose and no
interested party has reviewed the manuscript prior to submission. The author wishes
to thank Gianni De Stefano, David Lawrence, Chris Pike and Ekaterina Rousseva for
their valuable comments. Email: [email protected].
1) C Zeisberg, ‘Private Equity—Introduction to the Asset Class’ (2011), INSEAD Executive
MBA.
2) Moreover, in 2014, venture-backed companies represented 21% of market
capitalisation and 44% of research and development (also R&D) considering all US
public companies. These figures increase, respectively, to 63% and 85% if only US
public companies founded more recently, after 1974, were to be considered, see Will
Gornall and Ilya A. Strebulaev, ‘The Economic Impact of Venture Capital: Evidence
from Public Companies’ (2015) <https://www.gsb.stanford.edu/gsb-cmis/gsb-cmis-
download-auth/406981>, tables 2 and 3.
3) The US covered around 90% of the venture capital global investment value in the
1990s, while now it accounts for about 51% in terms of deal value and 58% of deal
volume, see National Venture Capital Association, 2019 Yearbook
<https://nvca.org/wp-content/uploads/2019/08/NVCA-2019-Yearbook.pdf>, p. 10.
4) As of December 31, 2019, their respective market capitalization amounted to 1.29
trillion dollars, 1.20 trillion dollars, 920.3 billion dollars, 920.2 billion dollars and 585
billion dollars (Source: YCharts data).
5) There are various data sources covering the American venture capital industry that
are not entirely consistent. This paper relies predominantly on the public data
published by the American National Venture Capital Association (also NVCA). Data
are not always consistent among different years even using the same source,
suggesting that there are successive adjustments to data concerning previous years.
6) Funding amounted to 130.93 billion dollars in 2018, increasing more than four times
since 2006 (see NVCA, 2019 Yearbook Data Pack, p. 23)
7) In the very beginning, founders might rely on their financial capabilities with the
additional help of family and friends. At the angel stage, while venture capital funds
are not yet involved, wealthy individuals might participate. The seed stage includes
angel investors, professionally managed seed funds, as well as early stage venture
capitalists. At this stage the company has just been incorporated and the founders
are developing it. The angel/seed stage deal number share, relative to all venture
capital (also VC) stages, decreased from 53% to 42% in just three years; see Ibid., at n.
3, p. 23.
8) From 2015 to 2018, total deals and angel/seed deals decreased, respectively, 17%
and 34%, while early VC and later VC deal volume increased, respectively, 3% and
4%, see Ibid., at n. 3, p. 23.
9) From 2015 to 2018, the value of total deals, early stage VC and later-stage VC
increased, respectively, 65%, 72% and 75%, while the value of deals in the angel/seed
stage decreased in the same period about 9%. See data related to 2018 from see
Ibid., at n. 3, p. 24 and data related to 2015 from PitchBook-NVCA Venture Monitor 4Q
2017.
10) Ibid., at n. 6, pp. 23 and 24.
11) Ibid., at p. 28.
12) Ibid.
13) Ibid., at n. 3, p. 6.
14) Oliver Wyman, ‘Assessing the Impact of Big Tech on Venture Investment’ (2018)
<https://www.oliverwyman.com/content/dam/oliver-
wyman/v2/publications/2018/july/assessing-impact.pdf>. Technology accounts for
an estimated 35% of global venture investing deal value and 9% of the equity market
capitalisation (slide 9).
15) I Hathaway, ‘Platform Giants And Venture-Backed Start-ups’ (2018)
<http://www.ianhathaway.org/blog/2018/10/12/platform-giants-and-venture-
backed-startups> This analysis has been quoted both in the report published by the
Stigler Committee on Digital Platforms (2019) <https://research.chicagobooth.edu/-
/media/research/stigler/pdfs/digital-platforms---committee-report---stigler-
center.pdf>, p. 17 (also Stigler Report) and by H Singer during a United States Federal
Trade Commission (also FTC) hearing, see H Singer, ‘FTC’s Hearing #3 on Competition
and Consumer Protection in the 21st Century—Understanding Exclusionary Conduct in
Cases Involving Multi-Sided Platforms: Issues Related to Vertically Integrated
Platforms’ (2018)
<https://www.ftc.gov/system/files/documents/public_events/1413712/cpc-hearings-
gmu_1017.pdf>
16) For Amazon, ‘Internet Retail’ A Sub-sector of ‘Retail’ in the Broader ‘Consumer and
Products and Services (B2C)’ Sector. For Google and Facebook, respectively, ‘Internet
Software’ and ‘Social Platform Software’, each a Sub-sector of ‘Software’ in the
Broader ‘Information Technology’ Sector.
17) The categories considered include comparable sub-sectors (‘software’, ‘retail’),
sectors (‘BC2’, ‘information technology’) and the rest of venture capital considered as
a whole.

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 18) Ibid., at n. 14, slide 13.

19) SK Kamepalli, RG Rajan, and L Zingales, ‘Kill Zone’ (2020), University of Chicago,
Becker Friedman Institute for Economics Working Paper No. 2020–19. Available at
SSRN: <https://ssrn.com/abstract=3555915>
or <http://dx.doi.org/10.2139/ssrn.3555915>
20) The authors considered 9 acquisitions above 500 million dollars in the period from
2006 to 2018.
21) See, N Grossman’s (Partner, Union Square Ventures) Intervention during Panel 3
Related to ‘Investing in Platform-Dominated Markets’ of Antitrust Division of the US
Department of Justice (DOJ), ‘Workshop on venture capital and antitrust’ (2020)
<https://www.justice.gov/atr/page/file/1255851/download>
22) Ibid., at n. 15, note 163, p. 78.
23) Alphabet Inc., ‘Annual report’ (2018),
<https://www.sec.gov/Archives/edgar/data/1652044/000165204419000004/goog10-
kq42018.htm>, p. 3.
24) From 2006 to 2018 the reduction amounted to 28% (Ibid., at n. 3, p. 33), but is even
greater if compared to the nineties, see Jeffrey M. Solomon, ‘Capital Formation,
Smaller Companies, and the Declining Number of Initial Public Offerings’ (2017), SEC
Investor Advisory Committee, p. 12.
25) While from 1990 to 2000, on a deal count basis, IPOs below 60 million dollars
accounted for 67% of total US IPO activity, from 2012 to 2016 their share dropped to
19%, see Ibid., at n. 24, p. 12. See also Susan Woodward’s (Founder, Sand Hill
Econometrics) intervention during panel 1 related to ‘What explains the Kill Zone?’ of
Ibid., at n. 21. However, liquid secondary markets can mitigate the effects of this
trend by allowing investors to exit even if the company does not go public; see the
fireside chat of Professor Joseph Grundfest (The William A. Franke Professor of Law
and Business, Stanford Law School) with Michael Moritz (Partner, Sequoia Capital)
during the workshop organised by the Ibid., at n. 21.
26) In the last 13 years, 2007 was the year in which M&A accounted for the lowest total
number of disclosed exits (including IPOs) and its share amounted to as much as
85.55%, see Ibid., at n. 3, pp. 34 and 35. As not all M&A deals have their value
disclosed, it is not possible to compare values of venture-backed IPOs to M&As.
27) Ibid., at n. 3, p. 35.
28) Analysis of M&A activity undergone in the ten years from 2010 to 2019 considering
publicly disclosed completed deals listed in Bloomberg’s database. Using
Bloomberg’s classification, the deal type considered is M&A, deals have been
allocated to a specific year based on their announcement date and have been
attributed to a specific GAFAM company even when it was not the sole acquirer.
Lastly, the deal value is the publicly disclosed one.
29) In recent years, GAFAM’s M&A activity has been decreasing. In 2019, the number of
their total deals was 25% lower than the peak reached in 2014. Compared to that
peak, in 2019 also the number of deals with an announced value above one billion
decreased by 40%. Comparing the 5 years from 2015 to 2019 with those from 2010 to
2014, that reduction was of 23%. These percentages have been obtained without
including the acquisition of properties.
30) Only 16% of the deals below one billion dollars have their value disclosed.
31) These figures do not include the acquisition of properties.
32) The study conducted by the consulting firm LEAR for the CMA, which focuses on
acquisitions by digital platforms from 2008 to 2018, finds that in nearly 60% of cases,
targets are, on average, four years old. The source of the data used by LEAR is
Crunchbase, a platform for finding business information about private and public
companies, complemented when necessary with other publicly available sources.
See, LEAR for the CMA, ‘Ex-post assessment of merger control decisions in digital
markets’ (2019) <https://www.learlab.com/publication/ex-post-assessment-of-
merger-control-decisions-in-digital-markets/>
33) The Economist, ‘Into the Danger Zone. American Tech Giants Are Making Life Tough for
Start-ups’ (2018) <https://www.economist.com/business/2018/06/02/american-tech-
giants-are-making-life-tough-for-startups>
34) Selling to the incumbent maximizes the profits of the start-up, as the acquirer and
the acquired firms share the proceeds of monopoly rather than competing with each
other. Moreover, resisting these acquisitions might be challenging for start-ups active
in the ecosystem dominated by an incumbent.
35) M Motta and M Peitz, ‘Big Tech Mergers’ (2020)
<https://www.crctr224.de/en/research-output/discussion-papers/discussion-paper-
archive/2020/big-tech-mergers-massimo-motta-martin-peitz-v2>, p. 20.
36) Ibid., at n. 15 and Ibid., at n. 21.
37) See, P Nakache’s (General Partner, Trinity Ventures) Intervention during Panel 3
Related to ‘Investing in Platform-Dominated Markets’ of Ibid., at n. 21.
38) P Nakache (General Partner, Trinity Ventures), ‘Competition in digital technology
markets: examining acquisitions of nascent or potential competitors by digital
platforms’ (2019), Written testimony before the U.S. Senate Committee on the
Judiciary—Subcommittee on Antitrust, Competition Policy, and Consumer Rights
<https://www.judiciary.senate.gov/imo/media/doc/Nakache%20Testimony.pdf>

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 39) The Economist, ‘Unicorns going to market’ (2019),
https://www.economist.com/weeklyedition/2019-04-20, pp. 23–26; Reid Hoffman and
Chris Yeh, ‘Blitzscaling: The Lightning-Fast Path to Building Massively Valuable
Companies’ (2018).
40) M Kenney and J Zysman, ‘Unicorns, cheshire cats, and the new dilemmas of
entrepreneurial finance’ (2018), https://kenney.faculty.ucdavis.edu/wp-
content/uploads/sites/332/2018/11/Unicorns-Chesire-cats-and-new-dilemmas-of-
entrepreneurial-finance-1.pdf.
41) Ibid., at n. 15, p. 13.
42) Ibid., at n. 14, slides 4 and 12.
43) Ibid., at n. 3, p. 24.
44) The theory of contestable markets, introduced by William Baumol in 1982, highlights
that, under a number of strong assumptions, concentrated markets may,
nevertheless, be competitive as the prospect of entry deters incumbents from
exerting market power, setting supra-competitive prices. William J. Baumol,
‘Contestable Markets: An Uprising in the Theory of Industry Structure’, 72 AM. ECON.
REV. 1 (1982).
45) Ibid., at n. 23, p. 3.
46) Digital Competition Expert Panel, ‘Unlocking digital competition’ (2019)
<https://www.gov.uk/government/publications/unlocking-digital-competition-
report-of-the-digital-competition-expert-panel>, p. 4.
47) S Calligaris, C Criscuolo and L Marcolin, ‘Mark-ups in the Digital Era’ (2018), OECD
Science, Technology and Industry Working Papers, 2018/10
<http://dx.doi.org/10.1787/4efe2d25-en>
48) F Calvino and C Criscuolo, ‘Business Dynamics and Digitalisation’ (2019), OECD
Science, Technology and Industry Policy Papers <https://www.oecd-
ilibrary.org/docserver/6e0b011a-en.pdf?
expires=1560789067&id=id&accname=guest&checksum=20D210574304FD671230313D6
33749E2>
49) Ibid., at n. 15, pp. 53–57.
50) The cost of capital is the return that investors expect for providing capital to a given
company.
51) CMA, ‘Online platforms and digital advertising—Market study final report’ (2020)
<https://assets.publishing.service.gov.uk/media/5efc57ed3a6f4023d242ed56/Final_r
eport_1_July_2020_.pdf>, par. 12, p. 8, as well as ‘Appendix D: Profitability of Google
and Facebook’.
52) With the exception of the United Kingdom, profitability analysis is not yet a
commonly applied tool in the assessment of market power. When looking backward,
economic and financial literature suggest that the right measures for profitability are
the internal rate of return (also IRR) and net present value (NPV). A large number of
past competition investigations in the United Kingdom have relied on ratios that can
be obtained from accounting reports like the ROCE or the return on sales (ROS) to
infer the extent of monopoly profits of a firm or industry, but relatively few
investigations have used the IRR or the NPV. While in theory those accounting ratios,
if adapted appropriately, can be used, they have not been always applied in this way
in practice. For a detailed analysis of profitability analysis and its implementation in
the United Kingdom, see Oxera, ‘Assessing profitability in competition policy
analysis’ (2003), Office of Fair Trading Discussion Paper <https://www.oxera.com/wp-
content/uploads/2018/03/OFT-Assessing-profitability-1.pdf> as well as Paul Geroski,
‘Profitability analysis and competition policy—revisited’ (2015),
https://www.oxera.com/agenda/profitability-analysis-and-competition-policy-
revisited/.
53) Joseph A. Schumpeter, ‘Capitalism, Socialism and Democracy’ (5th ed. 1976), pp. 81–
86.
54) The European Commission (also EC) alone has levied 8.25 billion euros in relation to
three different Google abuses of dominant position concerning, respectively, its
search engine giving illegal advantage to its own comparison-shopping service, its
Android mobile operating system in order to strengthen its search engine and, lastly,
some online advertising practices.
55) KA Bryan and E Hovenkamp, ‘Startup Acquisitions, Error Costs, and Antitrust Policy’
(2020), The University of Chicago Law Review, Vol. 87, No. 2, pp. 331–356.
56) Ibid., at n. 15, p. 17; OECD, Secretariat’s Background Note ‘Start-ups, Killer
Acquisitions and Merger Control’ (2020)
<http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?
cote=DAF/COMP(2020)5&docLanguage=En>, p. 2.
57) J Crémer, Yves-Alexandre de Montjoye and Heike Schweitzer, ‘Competition Policy for
the Digital Era’ (2019), European Commission,
<http://ec.europa.eu/competition/publications/reports/kd0419345enn.pdf>, pp.
121–123.
58) At the time of a given investigation ‘horizontal overlaps between the acquirer and the
target may look rather innocuous’.
59) The likelihood of the target being considered as a potential competitor on the
acquirer’s core market is uncertain and depends on the possible evolution in the
counterfactual scenario of the target as a realistic challenger of the incumbent.

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 60) This theory of harm appears less relevant in the digital sector than in the pharma
and agro-chemical industries, as research linked to the former is often closer to the
market and product market competition.
61) The term killer acquisitions has been borrowed from the pharmaceutical industry,
indicating an incumbent that acquires a potential competitor with an innovative
project that is still at an early stage of its development and subsequently terminates
the development of the target’s innovation in order to avoid a substitution effect,
pre-empting competition from innovating firms that potentially threaten its core
market position. In so-called killer acquisitions, not only is there a loss of the
competitive constraint posed by the acquired start-up, but also of the
product/service itself. It goes a step farther than the loss of potential competition,
leading also to a reduction of choice and variety.
62) The acquired product might grow into a complement that might be bundled or tied
to the incumbent’s product in order to exclude rivals.
63) M Bourreau and A de Streel, ‘Digital Conglomerates and EU Competition Policy’
(2019), Centre on Regulation in Europe (CERRE)
<http://www.crid.be/pdf/public/8377.pdf>, pp. 32–33.
64) T Valletti, ‘Après moi, le déluge! Tech Giants in the Digital Age’ (2018), CRA,
https://ecp.crai.com/wp-content/uploads/2018/12/Tommaso-Valletti-2018.pdf, p. 5.
65) A Fletcher, Introductory Expert Video to the OECD’s Competition Committee
Roundtable Related to ‘Start-ups, Killer Acquisitions and Merger Control’ (n. 56).
66) Ibid., at n. 56, p. 6.
67) Ibid., at n. 46, Recommended Action n. 10.
68) Such a ‘balance of harms’ approach is also supported by Ibid., at n. 35, p. 35.
69) European Commission, ‘Guidelines on the Assessment of Horizontal Mergers under
the Council Regulation on the Control of Concentrations between Undertakings’
(2004) , https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?
uri=CELEX:52004XC0205(02)&from=EN , par. 38.
70) OECD, Secretariat’s Background Note ‘Merger Control in Dynamic Markets’ (2020),
http://www.oecd.org/daf/competition/merger-control-in-dynamic-markets-
2020.pdf, p. 8.
71) Ibid., at n. 46, par. 3.102, p. 101.
72) Ibid., at n. 65.
73) Ibid., at n. 57, p. 111.
74) However, from a policy perspective, this might not always lead to a desirable
outcome as it could bring inefficient duplicative innovation, closely substitutive to
the incumbents’ products, to obtain a share of their persistent market power, rather
than disruptive innovation. Basically, the new entrant would aim at earning a fraction
of the platform’s profit, not at replacing it. This kind of innovation might not
maximise consumer welfare, as it is not likely to reduce prices or favour the
introduction of new products in the market to the benefit of consumers.
75) Ibid., at n. 55 and Kevin Bryan and Erik Hovenkamp, ‘Antitrust Limits on Start-up
Acquisitions’ (2020), Review of Industrial Organization
<https://doi.org/10.1007/s11151-020-09751-5> Their theory of competition amongst
innovating firms is not specific to industries where there are two-sided platforms
with network externalities.
76) The authors argue that, after the market becomes non-contestable, ‘the leader is not
willing to spend as much for a quality improvement, relative to what it would pay if the
laggard had been able to remain active’, as ‘the market structure cannot be made any
more favourable to the leader than it already is’ (pp. 18 and 19). Moreover, they specify
that in their model ‘the harm is not the traditional antitrust concern that future
potential competitors are being bought, but rather that start-up acquisitions affect the
technological gap and thereby influence competition and market structure’ (pp. 3 and
4).
77) Ibid., at n. 19.
78) In that regard, the authors argue that ‘at that point the investments are sunk and in a
case-by-case approach current decisions will not bind future ones’ (p. 24).
79) Ibid., at n. 46, par. 3.102, p. 101; Ibid., at n. 63, p. 20; Ibid., at n. 35, p. 8.
80) See the interview with Jean Tirole by Allison Schrager, ‘A Nobel-Winning Economist’s
Guide to Taming Tech Monopolies’ (2018), https://qz.com/1310266/, as well as Carl
Shapiro, ‘Antitrust in a time of populism’ (2018)
<https://faculty.haas.berkeley.edu/shapiro/antitrustpopulism.pdf>
81) Ibid., at n. 56.
82) JM Wilder, ‘Potential competition in platform markets’ (2019), Remarks prepared for
the Hal White Antitrust Conference <https://www.justice.gov/opa/speech/acting-
deputy-assistant-attorney-general-jeffrey-m-wilder-delivers-remarks-hal-white>.
More recently, the US FTC has challenged the acquisition of Pac Bio by Illumina as
both anticompetitive monopolisation and anticompetitive merger, indicating that a
killer acquisition strategy might in some circumstances be considered exclusionary
conduct. See <https://www.ftc.gov/enforcement/cases-proceedings/1910035/matter-
illumina-incpacific-biosciences-california-inc>
83) OECD, Secretariat’s background note on ‘Lines of Business Restrictions’ (2020)
<https://one.oecd.org/document/DAF/COMP/WP2(2020)1/en/pdf>
84) Ibid., at n. 51.

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 85) European Commission, ‘Shaping Europe’s Digital Future’ (2020)
<https://ec.europa.eu/info/strategy/priorities-2019-2024/europe-fit-digital-
age/shaping-europe-digital-future_en>

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