95
INNOVATION CONCERNS
IN HORIZONTAL MERGERS:
EMPIRICAL EVIDENCE
FROM BRAZILIAN MERGER
CONTROL
1
Preocupações de inovação em fusões
horizontais: evidência empírica do controle de
fusões brasileiro
Marcos Puccioni de Oliveira Lyra
2
Universidade Federal Fluminense (UFF) – Niterói/RJ, Brasil
Camila Cabral Pires-Alves
3
Conselho Administrativo de Defesa Econômica (Cade) – Brasília/DF, Brasil
STRUCTURED SUMMARY
Objective: this paper investigates how Cade – the Brazilian antitrust authority – has addressed
innovation concerns in merger assessments, using antitrust literature and the experiences of the
United States and the European Commission as reference points.
Method: review of academic and institutional literature, data collection, and case studies.
Conclusions: although Cade follows the standard approach in its Guidelines used by the US and the
European Commission, its experience with innovation concerns remains more limited than these
jurisdictions. An innovation-specific assessment was conducted in only one case: Bayer/Monsanto
(2018). In most cases, innovation was addressed within the standard analysis, oten in an insucient
manner. The findings highlight the need to develop a local approach tailored to the Brazilian context,
1 Editor responsável: Prof. Dr. Victor Oliveira Fernandes, Conselho Administrativo de Defesa Econômica (Cade), Brasília,
DF, Brasil. Lattes: http://lattes.cnpq.br/5250274768971874. ORCID: https://orcid.org/0000-0001-5431-4142.
Recebido em: 15/01/2025 Aceito em: 13/06/2025 Publicado em: 25/06/2025
2 Doutor em Economia (UFRJ – 2022), Professor Adjunto (Faculdade de Economia - UFF), Pesquisador do Gdec (Grupo de
Direito, Economia e Concorrência – UFRJ), Pesquisador do NIETI (Núcleo de Estudos em Economia Industrial, Energia, Território
e Inovação – UFF).
E-mail: marcoslyra@id.u.br. Lattes: https://lattes.cnpq.br/5480977221377907.
ORCID: https://orcid.org/0000-0003-4427-1147
3 Doutora em Economia (UFRJ – 2010), Conselheira do Conselho Administrativo de Defesa (Cade). Está cedida ao Cade
pela UFRJ, onde é Professora Associada (Instituto de Economia – UFRJ) e Pesquisadora do Gdec (Grupo de Direito, Economia e
Concorrência – UFRJ).
E-mail: camila.alves@cade.gov.br. Lattes: http://lattes.cnpq.br/4687008805056384.
ORCID: http://orcid.org/0000-0001-7888-3235.
5
96
LYRA, Marcos Puccioni de Oliveira; PIRES-ALVES, Camila Cabral. Innovation Concerns in horizontal
mergers: empirical evidence from Brazilian Merger Control. Revista de Defesa da Concorrência,
Brasília, v. 13, n. 1, p. 95-109, 2025.
https://doi.org/10.52896/rdc.v13i1.1927
as much of the current discussion relies on foreign case law. Finally, no significant evolution was
observed between 2015 and 2022.
Keywords: competition policy; horizontal mergers; innovation concerns; Brazil; Cade
RESUMO ESTRUTURADO
Objetivo: investigar como o Cade – a autoridade antitruste brasileira – tem discutido as questões
de inovação na avaliação de atos de concentração, tomando como ponto de partida a literatura
antitruste e as experiências dos EUA e da Comissão Europeia.
Método: revisão de literatura acadêmica, revisão de publicações institucionais, levantamento de
dados e estudos de casos.
Conclusões: apesar de o Cade seguir a análise padrão em seu Guia para a Análise de Fusões Horizontais
usada por EUA e Comissão Europeia, sua experiência é mais limitada do que estas jurisdições. Uma
avaliação específica de inovação foi utilizada apenas em Bayer/Monsanto (2018). Na maioria dos
casos, a inovação foi endereçada por meio da análise padrão, muitas vezes de forma insuficiente.
Os resultados destacam a necessidade de desenvolver uma abordagem local adaptada ao contexto
brasileiro, visto que grande parte da discussão atual se baseia em jurisprudência estrangeira. Por fim,
não foi observada evolução significativa entre 2015 e 2022.
Palavras-chave: defesa da concorrência; fusões horizontais; preocupações de inovação; Brasil; Cade.
JEL Classification: L40.
Summary: 1. Introduction; 2. Innovation Concerns in
Horizontal Merger Assessment; 3. The United States
and European Commission Experiences; 4. Innovation
Concerns in Brazilian Merger Control; 5. Concluding
Remarks; References.
1 INTRODUCTION
The assessment of innovation competition in merger cases poses a significant challenge for
antitrust authorities. From the innovation markets introduced by US Merger Control in the 1990s to
the European Commission’s recent four-layer competitive assessment
4
, authorities have applied new
procedures to properly address innovation concerns. Interestingly, these alternative approaches are
not explicitly outlined in their respective Horizontal Merger Guidelines (HMGs). Instead, the HMGs
of the US, the European Commission, and Brazil primarily emphasize the standard merger analysis
focused on product market competition.
4 There is a great number of publications discussing Dow/Dupont (2017), the first case to be assessed under the
four-layer competitive assessment, specifically or its impact on EU Merger Control in general. See: Petit (2017, 2018, 2019),
Denicolò and Polo (2018), Mosso (2018), Padilla (2019), Jung and Sinclair (2019), Chadha (2019), Suijkerbuijk (2019), Kokkoris and
Valletti (2020), Kokkoris (2020), Lyra and Pires-Alves (2023).
97
Addressing innovation competition requires careful consideration. Innovation outcomes
are uncertain, and competition in innovation occurs in diverse ways, demanding dierent analytical
approaches. Traditional tools such as concentration indices and market shares have become less
useful in cases involving innovation. Despite the complexity, assessing innovation competition is
crucial in some instances, as inadequate evaluations can undermine innovation incentives.
Empirical studies by Gilbert and Greene (2015) and Kern, Dewenter and Kerber (2016) have
shown that US authorities have considered innovation concerns - defined as changes in the standard
analysis steps due to innovation dynamics or the use of alternative approaches - in about one-
third of the challenged mergers between 1995 and 2014. Similarly, the European Commission began
developing this perspective more explicitly ater the Dow/DuPont case (2017)
5
. However, no such
empirical analysis exists for Brazil, highlighting the need to explore how innovation concerns are
addressed in Brazilian Merger Control. This paper aims to fill that gap by applying a dierent empirical
strategy: examining how innovation is considered at each stage of the analysis.
This paper investigates the extent to which Brazilian merger control considers innovation
concerns in horizontal mergers. These concerns arise in two scenarios: (i) when an alternative approach
beyond the standard analysis is used - referred to here as an “innovation-specific assessment” - and
(ii) when innovation is considered within the standard analysis.
Ater this introduction, the second section is dedicated to present how innovation may
influence each step of the standard analysis, focusing on the HMGs of the US, the European Commission,
and Brazil. We then examine how the US and the European Commission have addressed innovation
concerns in practice, based on empirical literature. In the fourth section, we investigate how innovation
concerns have been addressed by the Conselho Administrativo de Defesa Econômica (Cade) in merger
cases decided between 2015 and 2022 - a period selected due to the availability of digital records
6
.
The analysis focuses on cases decided by Cade’s Tribunal, as these involve recommendations for
blocking or approving mergers with remedies issued by the General Superintendence.
Finally, the paper concludes by showing that innovation concerns were addressed in only
21 cases reviewed by the Tribunal between 2015 and 2022 (representing 16,5% of all cases reviewed).
Of these, only one involved an innovation-specific assessment. In the remaining cases, innovation
concerns were considered within the standard framework and generally in a limited way.
2 INNOVATION CONCERNS IN HORIZONTAL MERGER ASSESSMENT
Competition is a multifaceted concept, and understanding it thoroughly requires analyzing
firms’ market behavior beyond price and quantity strategies. These include improving product quality,
oering a wider variety of products, among others. Among these competitive tactics, innovation
eorts are fundamental. They can lead to new or improved processes and products, boosting demand
and profit margins for successful innovators. Schumpeter (1942) emphasized how competition has two
dimensions: a passive (static price competition) and an active one (dynamic innovation competition),
the latter of which transforms the economic structure itself.
5 Case COMP/M. 7932 (EC 2017).
6 2015 is the first year that Cade’s documents are totally available in searchable digital format, justifying the choice of
period.
98
LYRA, Marcos Puccioni de Oliveira; PIRES-ALVES, Camila Cabral. Innovation Concerns in horizontal
mergers: empirical evidence from Brazilian Merger Control. Revista de Defesa da Concorrência,
Brasília, v. 13, n. 1, p. 95-109, 2025.
https://doi.org/10.52896/rdc.v13i1.1927
Innovation concerns play a dual role in merger analysis. First, it may influence the assessment
of mergers conducted under the standard analysis. When merging firms compete in a product market,
innovation may aect how mergers impact prices, quality, entry barriers, among other factors. Second,
innovation becomes the central concern when the merger aects an innovation market - requiring an
innovation-specific assessment, which we will discuss further below.
The standard analysis of horizontal mergers focuses on competition within a relevant product
market, typically defined through the Hypothetical Monopolist Test (HMT)
7
. In the assessment of
competitive significance stage, authorities consider market shares and concentration indices, such as
the Herfindahl-Hirschman Index (HHI)
8
, as proxies for market power. However, in markets with highly
dierentiated
9
or innovative products, these structural indicators lose explanatory power. Regarding
the latter, it is important to notice that the relationship between market concentration and innovation
remains inconclusive in the literature
10
. Both the US and European HMGs acknowledge this complexity
and advise caution when interpreting concentration metrics in innovation-driven markets (DOJ; FTC,
2010, p. 16-17; European Commission, 2004, p. 6).
The next step, assessing unilateral eects, examines a firm’s increased ability to exercise
market power post-merger. While price eects dominate this analysis, innovation may also be aected.
For instance, innovation-intensive industries oten have high entry barriers (such as Research and
Development - R&D - investment), and there may be rivalry more on innovation than price (European
Commission, 2004, p. 12; Cade, 2016a, p. 27). The US HMG explicitly discusses unilateral innovation
eects (DOJ; FTC, 2010).
In this paper, we define negative innovation eects as reductions in incentives to innovate
post-merger - whether by the merged entity or its rivals.
11
According to Kokkoris and Valletti (2020),
these eects may take two forms: (i) decreased incentives to continue ongoing innovation eorts,
possibly delaying and/or interrupting these eorts and (ii) reduced incentives to initiate new
innovation, resulting in less innovation in the future
12
.
7 The Hypothetical Monopolist Test (HMT) checks whether a hypothetical monopolist could profitably apply a small
but significant non-transitory increase in price (SSNIP). If such an increase is profitable, the market is well-defined; otherwise,
the test is remade adding other products or geographic areas to the hypothetical monopolist until the price increase becomes
profitable (DOJ; FTC, 2010, p. 7-15)
8 The Herfindahl-Hirschman Index is calculated by summing the squared markets shares of all firms in the product
market and used as an indicative of the level of concentration in that product market.
9 With homogenous products, there is a direct relation in the Cournot model between market power and the HHI which
supports the screening role of structural variables. With dierentiated products, factors like cross elasticity of demand and
diversion ratios - defined as a fraction of sales diverted to another producer due to a price increase (DOJ; FTC, 2010, p. 21) - play
a role in determining substitutability between the products of merging parties (Cade, 2016a, p. 36-37).
10 The well-known Arrow-Schumpeter controversy indicates two dierent positions on the relation between structure
and innovation, as Arrow (1962) presents a model which indicates that competitive firms have higher incentives to engage in
innovation eorts to escape competition than monopolists, while Schumpeter (1942) emphasizes that larger firms would be
more likely to innovate. This debate has both theoretical and empirical work, but the latter did not provide a definitive answer
to this debate.
11 Another way of assessing harm to innovation is the through the elimination of parallel research eorts, the Diversity
Argument, connected to the evolutionary approach (Jorde; Teece, 1990; Farrell, 2006; Sidak and Teece, 2009). A greater number
of innovation eorts increases the probability of at least one getting to the market, allowing a better functioning of the role of
the market as a selector of innovation and, as Farrell (2006) states, a diversity of approaches is beneficial in itself.
12 These channels are similar to the unilateral innovation eects present in the 2010 US Horizontal Merger Guidelines, as
the HMG includes a subsection dedicated to innovation in the unilateral eects section, mentioning two channels of innovation
eects: (i) if a merging party is engaging in innovation eorts that could divert sales from the other, and (ii) when firms have
similar innovation capabilities, which could capture sales from each other, resulting in longer-term innovation harm (DOJ; FTC,
99
Coordinated eects are also analyzed, assessing whether firms may be more likely to
coordinate post-merger. Innovation can disrupt coordination, making collusion less feasible (European
Commission, 2004, p. 10; DOJ; FTC, 2010, p. 26). However, coordination may also suppress innovation
(Cade, 2016a, p. 40).
The final stage of the standard analysis is the assessment of countervailing eciencies, which
can oset anticompetitive eects. Mergers may generate innovation-related eciencies through
synergies, technology transfers, or increased R&D productivity (Bena; Li, 2014, p. 195; Federico; Morton;
Shapiro, 2020, p. 134).
Cade also discusses the elimination of a maverick - a firm that typically has low production
costs and prices, driving market prices down, and/or is an innovative firm that fosters ongoing industry
innovation (Cade, 2016a, p. 47). Such elimination can have various eects, including a potential
reduction in innovation.
To summarize, innovation can be considered in several steps of the standard analysis.
Brazilian HMGs acknowledge innovation as a factor in (i) entry barriers, (ii) coordinated eects, and
(iii) eciencies (Cade, 2016a, p. 27-47). Likewise, the European Commission 2004 Horizontal Merger
Guidelines (2004) is cautious when it comes to innovation concerns, including elements such as:
(i) considering less innovation as anticompetitive eects; (ii) revising the role of market shares as
indicators of competitive significance; (iii) discussing the dual eect of mergers on innovation when
debating innovation eects, pointing out that innovation makes coordination harder; (iv) recognizing
innovation and R&D as barriers to entry; and (v) acknowledging R&D and innovation-related
countervailing eciencies. The US 2010 HMG discusses innovation in several aspects: (i) relativizing
the role of shares and concentration indices; (ii) discussing that enhanced market power may lead
to reduced innovation; (iii) presenting unilateral innovation eects (addressed in more detail in the
next subsection); (iv) considering that coordination may be less likely; and (v) debating countervailing
eciencies (DOJ; FTC, 2010).
Based on standard analysis, some mergers involve direct competition in innovation markets,
where innovation is the primary competitive dimension. This requires an innovation-specific
assessment, including the definition of a relevant innovation market and identification of rivals
capable of innovating. Both the US and EU have conducted such assessments, as we explore in the
next section.
3 THE UNITED STATES AND EUROPEAN COMMISSION EXPERIENCES
The first innovation market case in the United States was Roche/Genentech (FTC – 1990)
(Gilbert; Sunshine, 1995, p. 586). Although innovation-related concerns had appeared earlier, such as
in Dynamics/United Electric Coal Companies (1974), dynamic considerations became more prominent
starting with the 1992 edition of the US Horizontal Merger Guidelines (Glader, 2006, p. 60–68). The
mid-1990s marked a turning point for innovation in US antitrust policy. While only four cases were
challenged on innovation grounds between 1990 and 1994 (3% of all challenged cases), this number
rose to 47 cases between 1995 and 1999 (17.5%) (Gilbert; Tom, 2001, p. 44). This shit is linked to the
2010, p. 23-24).
100
LYRA, Marcos Puccioni de Oliveira; PIRES-ALVES, Camila Cabral. Innovation Concerns in horizontal
mergers: empirical evidence from Brazilian Merger Control. Revista de Defesa da Concorrência,
Brasília, v. 13, n. 1, p. 95-109, 2025.
https://doi.org/10.52896/rdc.v13i1.1927
adoption of Innovation Market Analysis (IMA) (Gilbert; Sunshine, 1995), a form of innovation-specific
assessment applicable to R&D-based competition, including pipeline competition.
More recently, two empirical studies have explored how US merger authorities address
innovation. Gilbert and Greene (2015) analyzed the frequency and treatment of innovation concerns
in merger challenges by the FTC and DOJ between 2004 and 2014. Using agency complaints and other
public documents, they identified cases where “innovation” or “research and development” were
mentioned in discussions of competitive eects or market structure, including cases assessed both
through the standard and innovation-specific assessment. Cases were further categorized based on
whether innovation was merely mentioned or substantively discussed. Of the 250 challenged mergers,
84 (33.6%) included innovation concerns
13
. Roughly half of those elaborated on the nature of harm
to innovation, while the others provided only brief references. The study also found a correlation
between R&D intensity and the likelihood of innovation-related challenges.
Similarly, Kern, Dewenter and Kerber (2016, p. 6) studied the presence of innovation concerns
in US merger enforcement between 1995 and 2008. They identified relevant cases by both searching
for keywords such as “research, development, manufacture, and sale of [...]” in market definition
and through an explicit discussion of competitive eects. Their analysis included both standard
and innovation-specific assessments, specifically investigating the presence of the latter using the
presence of innovation concerns in market definition as criterion. Among 399 challenged mergers,
135 (33,8%) involved innovation concerns. In total, 341 relevant markets were reviewed in these cases,
with 323 showing innovation-related aspects. Of these: 222 markets included innovation in the market
definition (approx. 68,8%); 255 included innovation in the assessment of anticompetitive eects
(approx. 78,9%); 105 markets featured arguments related to innovation incentives (approx. 32,5%);
23 cited innovation diversity concerns (approx. 7,1%)
14
. The study also noted the use of concentration
measures in these markets: HHI or market shares (50,2%), number of firms (38,4%), and non-quantitative
indicators (25,1%)
15
.
In the European Union, innovation played a marginal role in merger assessments under the
1989 EC Merger Regulation. Although the 2004 Horizontal Merger Guidelines introduced some references
to innovation, a more substantive shit occurred with the Dow/DuPont case (2017), which marked the
beginning of a new analytical framework: the four-layer competitive assessment
16
. It investigates overlaps
regarding: (i) price/product competition involving incumbent products; (ii) price/product competition
considering late-stage pipeline projects (an overlap between a marketed product and a late-stage
pipeline product or between late-stage pipeline products); (iii) innovation competition involving pipeline
products in earlier stages (which depend on innovation incentives to finish developing); (iv) innovation
competition related to capabilities to innovate in certain innovation spaces
17
(European Commission,
13 The authors also discuss the dierences between the two agencies in several topics. Regarding the frequency of
innovation concerts, the FTC challenged 164 mergers in this period, with 54 of them alleging harm to innovation (around 32.9%).
The DoJ challenged only 86 cases, with 30 alleging harm to innovation (around 34,9%) (Gilbert; Greene, 2015, p. 1933).
14 For a brief presentation of the diversity argument, see supra note 8.
15 The authors also discuss: (i) the dierences between both US Agencies in all the issues assessed; (ii) dierence of the
topics assessed over time (comparing the 1995-2003 and 2004-2008 periods) and (iii) the relation of innovation concerns and
R&D intensity.
16 The Commission did not use the term four-layer competitive assessment in Dow/Dupont but used it in other two
cases assessed under this framework: Bayer/Monsanto (2018) and AbbVie/Allergan (2020). See Lyra and Pires-Alves (2023, p.
9-10).
17 We can understand the notion of competition over innovation spaces as competing over discovery targets, i.e.,
101
2020, p. 5-6). In Dow/DuPont, the European Commission identified overlaps not only in product markets
but also in early pipeline projects and lines of research, and (ii) global R&D integrated organizations, i.e.,
firms with the necessary capabilities to exert competitive pressure.
Mosso (2018) discussed qualitative aspects of innovation in EU merger control and provided
statistics for 2015–2017. During this period, the EC received over 1,070 merger notifications and intervened
in 73 cases (approx. 6,8%). Of these, 10 (13,7%) involved innovation concerns. These cases typically fell
into two categories: mergers involving pipeline products and those aecting early-stage innovation.
In conclusion, both US and European authorities have developed innovation-specific
assessments. While the US approach is well documented through empirical studies, the European
Commission has more recently expanded its analytical toolkit. Without attempting to replicate these
studies, the next section examines Brazil’s experience with innovation concerns in merger control.
4 INNOVATION CONCERNS IN BRAZILIAN MERGER CONTROL
As explored in this paper, the US, EU, and Brazilian Horizontal Merger Guidelines primarily
focus on the standard analysis and incorporate innovation concerns to some extent. However, while
we know that the US and EU have implemented innovation-specific assessments in certain cases,
Brazil lacks empirical studies on this subject. This section aims to address that gap.
The first subsection outlines the institutional framework of Brazilian Merger Control, followed
by a description of our methodology in the second subsection, while the last one presents our results
and discussion.
4.1 Brazilian Merger Control Framework
Cade operates under Law 12.529/2011, which came into force in May 2012. This framework is
supplemented by guidelines, including the 2016 Guide for Horizontal Merger Review, referred to as the
Brazilian Horizontal Merger Guidelines (HMG).
The review process begins with Cade’s General Superintendence (SG), the investigative body,
which first decides whether the merger should follow a simplified or ordinary procedure. The simplified
procedure applies to transactions with minimal competitive impact and results in a quicker decision
by the SG
18
. In contrast, the ordinary procedure involves a more detailed investigation. SG can approve
a merger unconditionally, recommend its prohibition, or suggest conditional approval. If a prohibition
or conditions are recommended, the final decision is made by Cade’s Tribunal, which consists of six
commissioners and a president. Additionally, even in cases where SG approves a merger, the case may
widening the reach of the analysis of overlaps involving pipeline competition to look at competition in steps before pipeline
stages, such as the discovery and development phases (Petit, 2019, p. 878-881).
18 Resolution nº 2/2012 explains that the possibility of assessing a case under the simplified procedure is dedicated to
cases with minor potential to harm competition. The decision to apply this procedure is discretionary, but need to fit cases such
as when: (i) a joint venture is formed to act in a market in which there is no horizontal or vertical relation to the parties; (ii) when
the acquirer did not previously act in the markets aected by the merger or the ones vertically related; (iii) the merged entity
would have 20% or less market share when there is a horizontal overlap; (iv) the merged entity would have 30% or less market
share in any of the aected markets when there is vertical integration.; (v) mergers which result is a variation of less than 200
point in the HHI (if the resulting market share is less than 50%); and (vi) other cases not addressed by the previous criteria but
considered simple enough by the SG (Cade, 2012, p. 3-5).
102
LYRA, Marcos Puccioni de Oliveira; PIRES-ALVES, Camila Cabral. Innovation Concerns in horizontal
mergers: empirical evidence from Brazilian Merger Control. Revista de Defesa da Concorrência,
Brasília, v. 13, n. 1, p. 95-109, 2025.
https://doi.org/10.52896/rdc.v13i1.1927
be brought before the Tribunal through an appeal or at the request of a commissioner
19
.
4.2 Methodology
The Brazilian HMG recognizes innovation in standard merger assessments, particularly
regarding entry conditions, coordinated eects, eciencies, the elimination of maverick firms, and
innovation slowdowns as potential anticompetitive eects. However, it does not address innovation-
specific assessments - that is, cases in which a relevant innovation market is defined, and competition
occurs outside the traditional product market. Law 12.529/2011 also identifies the promotion of
technical development as a condition for approving mergers, implicitly linking merger review to
innovation (Brasil, 2012).
To assess how innovation concerns are addressed in Brazil, we examined Cade decisions from
2015 to 2022
20
, searching for cases involving either innovation-specific assessments or discussions of
innovation within the steps of the standard analysis. We used keywords related to innovation - such
“innovation”, “innovator”, “innovative”, “research and development”, “pipelines”, “patent”, “patented”
along with its plural and gender variations
21
. We reviewed both commissioners’ decisions and opinions,
as well as the SG’s advisory opinions.
Our analysis focused exclusively on cases decided by the Tribunal, which typically involve
greater scrutiny and recommendations for remedies or prohibition
22
. This choice aligns our approach
with the US and EU studies while reflecting Brazil’s institutional context. Ater filtering and discarding
irrelevant cases
23
, we identified 21 relevant merger cases involving innovation concerns. These are
listed in Table 1
24
.
19 According to the Statutes of Cade, if the SG approves a merger, within 15 days another player (or a regulatory agency
if the sector is regulated) may appeal and a member of the Tribunal may bring the case under its directreview (Cade, 2021, p.
41).
20 Our analysis starts in 2015 due to the availability of data in digital format. See supra note 3.
21 The exact terms searched in Portuguese are: inovação, inovações, inovador, inovadores, inovadora inovadoras,
inovativo, inovativos, inovativa, inovativas, pesquisa e desenvolvimento, pipeline, pipelines, patente, patentes, patenteado,
patenteados, patenteada, patenteadas.
22 We also included the cases which went to the Tribunal due to being contested, but only the ones in which the
court considered the appeal and assessed it in its merits (even the cases in which the final decision was the same as the one
presented by the SG).
23 A frequent situation for discarding the case was the word innovation appearing in a generic description of which
are the possible outcomes of an increase in concentration in the beginning of the analysis of the likelihood of anticompetitive
eects section, without considering innovation ater all.
24 Among the 20 cases, only Brink’s/Rodoban (2018) was assessed by the Tribunal due to an appeal by a rival. The other
nineteen either the SG recommended blocking/approving under conditions or called to the Tribunal by a commissioner.
103
Table 1 - Mergers with innovation concerns decided by Cade’s Administrative Tribunal (2015-2022) -
Parties, Case Number, Year and Sector
25
Parties
Year
Case Number
Sector
Dabi Atlante/Gnatus 2015
08700.001437/2015-70
Dental Products
Tigre/Condor 2015 08700.009988/2014-09
PVC Solutions
Continental/Veyance 2015
08700.004185/2014-50 Automotive
GSK/Novartis 2015
08700.008607/2014-66
Pharmaceutical
SBT/Record/Rede TV! 2016
08700.006723/2015-21 Media and entertainment
Reckitt Benckiser/Hypermarcas 2016 08700.003462/2016-79 Sexual Welfare
Saint-Gobain/SiCBRAS
2016
08700.010266/2015-70 Construction Materials
Halliburton/Baker Hughes 2016 08700.007191/2015-40 Oil and Gas
Bradesco/Banco do
Brasil/Santander/Caixa Econômica/Itaú
2016 08700.002792/2016-47 Financial
Itaú/Citibank 2017
08700.001642/2017-05 Financial
Ipiranga/Alesat 2017
08700.006444/2016-49
Oil and Gas
John Deere/Monsanto
2017 08700.000723/2016-07 Agricultural Machinery
Brink’s/Rodoban
2018 08700.000166/2018-88 Logistics and Security
Itaú/XP
2018 08700.004431/2017-16
Financial
Bayer/Monsanto 2018
08700.001097/2017-49
Biotechnology
International Business Machines
Corporation (IBM)/Red Hat
2019 08700.001908/2019-73 Software
Disney/Fox
2019
08700.004494/2018-53 Media and entertainment
Stone/Linx 2021 08700.003969/2020-17
Financial Services
Danfoss/Eaton 2021 08700.003307/2020-39
Hydraulic components
Hypera/Takeda 2021 08700.003553/2020-91 Pharmaceutical
Rede D'Or/SulAmérica
2022 08700.003959/2022-35 Health Insurance
Source: authors elaboration (2024).
These 21 cases span various sectors, including pharmaceuticals, biotechnology (typically
linked to pipeline innovation), and media/entertainment (where innovation does not follow structured
pipelines). The next section analyzes these cases in detail.
4.3 Results and Discussion
We analyzed 21 merger cases in which innovation concerns were present between 2015 and
2022. These cases represent approximately 16,5% of the 127 total Tribunal cases in the period. It is
important to note that our definition of innovation concerns is broader than in previous US studies, as
it includes both innovation-specific assessments and innovation considerations within the standard
analysis. Therefore, results are not directly comparable.
Only one case involved an innovation-specific assessment: Bayer/Monsanto (2018)
26
. In this
case, Cade defined the relevant market based on innovation dynamics
27
. The SG’s report addressed
innovation concerns in several dimensions, including: concentration metrics; entry conditions
(specifically the time required to enter the market through R&D); innovation-based rivalry and the
25 All Cade’s public proceedings mentioned in this article can be found at: https://x.gd/ONDMz.
26 Case 08700.001097/2017-49.
27 The definition of many of the markets assessed in this case had words such as the “development of”, “improvement
of” and “licensing of”.
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LYRA, Marcos Puccioni de Oliveira; PIRES-ALVES, Camila Cabral. Innovation Concerns in horizontal
mergers: empirical evidence from Brazilian Merger Control. Revista de Defesa da Concorrência,
Brasília, v. 13, n. 1, p. 95-109, 2025.
https://doi.org/10.52896/rdc.v13i1.1927
competitive relevance of R&D investments; unilateral innovation eects.
The SG identified four potential innovation-related harms involving soy and cotton seeds:
(i) the discontinuation, interruption, or redirection of ongoing innovation projects; (ii) a long-term
reduction in the firms’ incentives to initiate new innovation eorts; (iii) possible decline in R&D
incentives for other firms in the market; (iv) an increase in entry barriers for competitors due to the
merged firm’s dominant position, resulting in less incentives to enter the market
28
.
These eects correspond to the two channels of harm outlined by Kokkoris and Valletti (2020):
reduced incentives to continue innovation eorts and diminished incentives for future innovation
eorts. Countervailing eciencies were also discussed in this case. The European Commission assessed
Bayer/Monsanto using the four-layer competitive assessment framework, suggesting alignment in the
concerns addressed.
The remaining 20 cases were reviewed under the standard analysis but still raised
innovation concerns. Six of them addressed unilateral innovation eects, mostly related to the
potential reduction in incentives to innovate post-merger. In SBT/Record/Rede TV! (2016)
29
, a joint
venture involving three TV broadcasters was created to license channels to cable companies. One
commissioner raised concerns about reduced incentives for new content creation; another countered
that such eorts would naturally occur due to competition with Globo, the market leader. In Disney/
Fox (2019)
30
, movie theater chains claimed that the acquisition might reduce innovation in film
production. The SG investigated these eects. In Itaú/XP (2018)
31
, a traditional Brazilian bank acquired
a minority stake in XP, an innovative, disruptive financial platform. XP’s role as a maverick reduced
the relevance of HHI in the analysis. One commissioner raised concerns about removing an innovative
maverick. The SG noted Brazil’s lack of tools to properly assess innovation in mergers and referenced
ongoing developments in other jurisdictions. In John Deere/Monsanto (2017)
32
, the SG cited the DOJ’s
complaint and third-party concerns to examine innovation-based rivalry. The merger was seen by
Cade as potentially reducing innovation. In Halliburton/Baker Hughes (2016)
33
, the SG recognized the
existence of innovation competition and the risk that the merger would reduce innovation eorts
34
.
In Rede D’Or/SulAmérica (2022)
35
, a competitor argued that the merger would reduce innovation. The
Tribunal ultimately rejected this claim
36
.
Countervailing eciencies, positive innovation eects, were discussed in five cases: Stone/
Linx (2021)
37
, John Deere/Monsanto (2017), Reckitt Benckiser/Hypermarcas (2016)
38
, Tigre/Condor
28 Annex to the Report No. 9/2017 in Merger Case nº 08700.001097/2017-49 (Bayer/Monsanto), p. 99-144.
29 Case 08700.006723/2015-21.
30 Case 08700.004494/2018-53.
31 Case 08700.004431/2017-16.
32 Case 08700.000723/2016-07
33 Case 08700.007191/2015-40.
34 Technical Note No. 41/2015 in Merger Case nº 08700.007191/2015-40 (Halliburton/Baker Hughes).
35 Case 08700.003959/2022-35.
36 Opinion of Commissioner Victor Fernandes in Case nº 08700.003959/2022-35 (Rede D’Or/SulAmérica).
37 Case 08700.003969/2020-17.
38 Case 08700.003462/2016-79.
105
(2015)
39
, Bradesco/Banco do Brasil/Santander/Caixa Econômica/Itaú (2016)
40
.
We can now proceed to discuss the 20 cases assessed solely under the standard analysis to
identify in which steps innovation played a role. These are summarized in Graphic 1.
Graphic 1- Standard analysis steps where innovation concerns were raised in merger cases decided
by Cade’s Administrative Tribunal (2015–2022)
Source: authors elaboration (2024).
First, in two cases, innovation influenced the interpretation of concentration and market
shares. For instance, in John Deere/Monsanto, innovation was claimed to be the reason behind John
Deere’s leadership, while in Itaú/XP, XP’s maverick status weakened the relevance of HHI. Second,
in five cases innovation aected entry analysis. Patents (five cases), R&D spending (two), and time
to market (one) were noted. Third, in nine cases, innovation influenced rivalry analysis. In three of
them there was a debate on whether a firm could be considered a maverick, while in others, rivalry
was innovation-based, or it could stimulate innovation in the market. Fourth, in five cases, the eect
of firms’ innovation eorts on coordinated eects (in price) likelihood was discussed. In five cases
unilateral innovation eects were discussed. Finally, in five cases countervailing eciencies were
discussed
41
.
Table 2 maps all 21 cases - including Bayer/Monsanto, that was assessed under an innovation-
specific assessment - to the respective steps of the merger analysis where innovation was considered.
39 Case 08700.009988/2014-09.
40 Case 08700.002792/2016-47.
41 Another comment is that in four cases (including Bayer/Monsanto) there is innovation-related non-horizontal eects
discussion regarding market foreclosure, which is not the object of this paper.
106
LYRA, Marcos Puccioni de Oliveira; PIRES-ALVES, Camila Cabral. Innovation Concerns in horizontal
mergers: empirical evidence from Brazilian Merger Control. Revista de Defesa da Concorrência,
Brasília, v. 13, n. 1, p. 95-109, 2025.
https://doi.org/10.52896/rdc.v13i1.1927
Table 2 – All Innovation concerns identified in mergers decided by Cade’s Administrative Tribunal
(2015-2021)
GSK/Novartis (2015)
Dabi Atlante/Gnatus (2015)
Tigre/Condor (2015)
Continental/Veyance (2015)
SBT/ Record/RedeTV! (2016)
Halliburton/Baker Hughes (2016)
Reckitt Benckiser/Hypermarcas (2016)
Saint-Gobain/SiCBRAS (2016)
Ipiranga/Alesat (2017)
John Deere/Monsanto (2017)
Itaú/Citibank (2017)
Brink's/Rodoban (2018)
Bayer/Monsanto (2018)
Itaú/XP (2018)
Disney/Fox (2019)
IBM/Red Hat (2019)
Stone/Linx (2021)
Danfoss/Eaton (2021)
Hypera/Takeda (2021)
Rede D'Or/SulAmérica (2022)
Countervailing
Efficiencies
Bradesco/Banco do Brasil/Santander/Caixa
Econômica/Itaú Unibanco (2016)
Innovation market
definition
Assessment of market shares
and concentration indexes
Entry
Rivalry
Innovation
Unilateral Effects
Source: authors elaboration (2024).
Overall, our findings suggest that Brazilian merger control has a limited track record in
addressing innovation concerns. Although Bayer/Monsanto illustrates an exception when applying an
innovation-specific assessment, some cases involved only brief or indirect references to innovation.
That said, the presence of innovation discussions in multiple steps of the analysis reflects a growing
awareness of its importance.
5 CONCLUDING REMARKS
Assessing innovation concerns in horizontal mergers remains a significant challenge for
antitrust authorities. While the standard merger analysis framework captures some innovation eects,
it oten falls short in fully addressing innovation-related harms. The Horizontal Merger Guidelines of
the US, European Commission, and Brazil acknowledge innovation to some extent when applying their
standard analyses in some steps. However, empirical practice tells a more nuanced story.
The US and EU have advanced beyond the standard analysis in select cases. The US has
considered innovation markets since the 1990s and has generated substantial empirical evidence on
its case law. The European Commission, in turn, has developed an innovation-specific assessment
framework, exemplified by the four-layer competitive assessment introduced in Dow/DuPont (2017).
In Brazil, our research reveals four key findings. First, Cade primarily relies on standard analysis,
like its US and EU counterparts, with innovation concerns occasionally considered within certain steps.
Second, its experience with innovation-specific assessments is limited: only one case (Bayer/Monsanto,
2018) featured an innovation-specific approach with detailed analysis of innovation dynamics. Fourth,
there is a clear need for a locally adapted analytical approach to address innovation, particularly given
that many assessments rely heavily on foreign case law or comparative references. For instance, Itaú/
XP (2018), a purely domestic case, highlighted the lack of analytical tools available to Cade in evaluating
innovation concerns. Fourth, there has been no clear evolution in Cade’s approach between 2015 and
2022. Apart from the Bayer/Monsanto case, innovation discussions have remained superficial.
107
Some of this cautiousness may stem from the fact that many merging firms conduct their R&D
activities outside Brazil. Nonetheless, as Itaú/XP demonstrates, innovation competition is not limited
to global tech or pharmaceutical companies—it can be central to domestic markets as well.
The Bayer/Monsanto case provided a valuable precedent and internal learning opportunity
for Cade. It may serve as a reference point for developing a more systematic approach to innovation
in Merger Control. Considering the advances seen in other jurisdictions, particularly the EU, it is
important that Cade further engages with this agenda and begins shaping its own tools and practices.
Future research could aim to develop an innovation-specific framework suited to the Brazilian
context, including potential updates to the Horizontal Merger Guidelines. Additionally, empirical work
focusing on how mergers in innovation-intensive sectors are assessed by Cade could deepen our
understanding of the challenges and opportunities in evaluating innovation competition in Brazil.
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