Antitrust

4 4 that Bayer divest pipeline research projects, intellectual property related to new or planned products, research data related to any R&D efforts and the related global R&D facilities. This approach is an indication that the DOJ recognizes that competition in competitive markets is not static and that in order to preserve future competition the DOJ will readily seek to ensure that the divested businesses have all assets required to remain relevant, including R&D resources to allow for technological innovation. Both U.S. agencies have stated their intent publicly and taken concrete steps in the form of enforcement actions to effectuate stronger protections for nascent competitors. Accordingly, in mergers and conduct cases, counselors should be aware that the FTC and the DOJ will consider more than just static market shares in assessing competitive risk. It is advisable to consider any case's effect on future entry and the suppression of nascent competition. EUROPEAN UNION As in the U.S., nascent competition is a topic that continues to attract the attention of the European Commission (EC). The EC has increasingly been looking beyond existing horizontal product overlaps with future competition taking more prominence in a number of large transactions. Innovation has always been within the scope of EU merger control. The EC's 2008 horizontal merger guidelines provide that "effective competition may be significantly impeded by a merger between two important innovators." However, this was rarely applied beyond products in late-stage development and most commonly used in the pharmaceutical sector until recently. Within the pharmaceutical sector, an increased focus on innovation can be seen where the EC has started to look beyond phase III pipeline products (those closest to market) and required divestments of phase II and phase I pipeline products (see, for example, M.7275 Novartis/GSK, M.7559 Pfizer/ Hospira and M.8401 J&J/Actelion). This is despite significant uncertainty as to whether these products would ever develop to market. Innovation as a distinct theory of harm has been in sharp focus since the EC's 2017 decision in M.7932 Dow/ DuPont where extensive divestments of DuPont's R&D business were required in addition to divestitures of actual product overlaps. This decision is significant because the EC looked at both individual MERGER CONTROL 07 I N N O V A T I O N H A S A L W A Y S B E E N W I T H I N T H E S C O P E O F E U M E R G E R C O N T R O L The Protection of Nascent Competitors: A U.S. and EU Perspective

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