The present work seeks to develop a framework for reviewing mergers and evaluating merger remedies that can help promote competition in innovation in ICT industries while preserving merger-specific efficiencies. The study has inter-disciplinary approach benefitting extensively from law, economics and corporate strategy and seeks to answer the following research questions:
1. Is the traditional structure-conduct-performance paradigm (SCP) to define relevant markets
suitable for ICT industries? What additional factors need to be taken into consideration?
2. What is the impact of network effects on neighbouring markets and how tipping can lead to an inferior standard being set in the relevant as also the neighbouring markets?
3. In ICT mergers, what are the special set of industry-specific factors such as network effects, tipping, that should be taken into consideration while selecting a particular remedy?
In the backdrop of findings from 1-3 and special characteristics identified in innovation-led ICT sector, the research explores:
4. What kind of remedies are more effective in promoting competition-in-innovation, by retaining the merging firms' as also competitors' incentives to innovate?
5. Developing an in-built monitoring mechanism such as arbitration, in behavioural remedies in order to minimise the transaction costs associated with them.
The preliminary results of the study indicate that considering the presence of Schumpeterian competition in the industry, the competition authorities need to assess the resulting impact of dominance in the relevant market as network effects may subsequently influence the neighbouring markets through tipping. Even though a clear cut segregation of remedies into behavioural and structural is debatable, nonetheless, based on my definition in the research project, one can resolutely conclude that there is a preferential shift towards behavioural vis-à-vis structural remedies on both sides of the Atlantic, particularly in case of mergers in the ICT sector. Interoperability and standardization remain one of the preferred remedies in the sector on both sides of the Atlantic. Frequent deployment of behavioural remedies necessitates higher associated costs of ex-post monitoring and in order to minimize them and promote effective ex-post self-monitoring, the authorities frequently incorporate arbitration and monitoring trustee in the commitments.