Philips changed its company slogan from “We make things better” to “We create better ideas”
Philips is but one of the companies – albeit a pioneer – that recognizes the crucial forward-looking importance of innovation. Its CEO, Frans van Houten, has been quoted as saying: “Innovation is our lifeblood and will be the main driver of profitable growth going forward. … I intend to drive innovation with more intensity to help us win new customers.”
The U.S. Department of Commerce published a 2010 report claiming that 75% of U.S. economic growth since the end of World War II is attributable to innovation in technology.
Antitrust law is likewise cognizant of the uniqueness of ideas — the result of innovation — rather than old-fashioned brick-and-mortar “products & services”. For instance, how do you define the relevant market for a merger of ideas-based companies? The agencies have come to accept the existence of innovation markets almost two decades ago, in the mid-1990s (based on the original “R&D markets” concept of the 1980s, and driven in no insignificant part by the advent and meteoric rise of biotechnology patents). The 2010 U.S. Horizontal Merger Guidelines now expressly incorporate the concept of innovating as a relevant metric of competitiveness into their language, notably at section 1 of the HMG: A transaction may have anti-competitive effects if it strengthens a firm’s market power by encouraging market participant(s) “to raise price, reduce output, diminish innovation, or otherwise harm customers as a result of diminished competitive constraints or incentives.”
You can read our first installment of the thematic collection here (last post on innovation, competition and IP in developing countries), written by contributing author and Tilburg University scholar Sofia Ranchordás.