Tommaso Valletti

The innovation theory of harm in merger control: Some clarifications Recent literature has analyzed the unilateral effects of mergers on investment and innovation. This note explores the Innovation Theory of Harm from a…

Once properly interpreted, econ theory overwhelmingly supports the ITOH.

👉 Without synergies/spillovers, mergers harm consumers.

So: weakening merger control in the name of innovation is misguided.
The economics is clear — the ITOH still stands.

📄 Article www.sciencedirect.com/science/arti...

My paper revisits the Innovation Theory of Harm (ITOH): mergers can reduce firms’ incentives to invest & innovate.

This theory has shaped major EU merger cases in telecoms & agro-chemicals.

What I find:

🚨 New paper in Economics Letters!

Do mergers boost or harm innovation? The debate is heating up in EU & UK policy circles.

Some argue:
Relax merger control → more investment, productivity, competitiveness.
This view has influenced reports like Draghi’s & UK gov’t policy.
But is it right? 🤔

Call for papers, 4th UK Workshop on Digital Economics, London 28 November 2025: competitionpolicy.ac.uk/events/4th-w... This is always a great event

🚨Free data alert!! 🚨 Please share.

Large new dataset of Amazon product reviews, including full text and photos and product characteristics, with individual *reviews labeled as fake reviews*.

I believe this is the first publicly available data of this kind.

github.com/bretthollenb...

Findings: Ex post actions against consummated mergers exist but do not have a good record of success.

Implications: postmerger policy ineffectiveness needs a more stringent ex ante policy in order to achieve the right balance.

Link to the pre-print:

papers.ssrn.com/sol3/papers....

Ciao

2/2

New paper just accepted in the Antitrust Law Journal written with John Kwoka.

We study the policy toward consummated mergers that prove to be anticompetitive, both in theoretical and empirical terms.

1/2

⭐Join us online for a high-level debate on merger control in Europe
Featuring E Tarantino, S Athey, @janeeckhout.bsky.social, P Heidhues, F Ederer, @tomasoduso.bsky.social
Moderator: @cristinacaffarra.bsky.social
14 July @ 17:00 CEST
cepr.org/events/updat...
@tomvalletti.bsky.social

I’ve written this piece in The Times.

Competition should work for the many, not the few.

Video of this remarkable webinar now available online:
www.youtube.com/watch?v=v7e5...

Designing “Buy European” Policies for European Strategic Autonomy - 15 Apr @ 17:00 CEST

🗣️@snoep.bsky.social, D Harhoff, U Akcigit, G Spagnolo, B Baltzan, @schularick.bsky.social

@sandertordoir.bsky.social @tomvalletti.bsky.social @cristinacaffarra.bsky.social

cepr.org/events/desig...
#EconSky

FBP muted price competition among bookshops. But competition was still at work and turned to non-price aspects that overall have benefited readers in the Italian book market.

The paper is dedicated to Mario a dear friend who passed away far too soon. ❤️

Read at: ow.ly/BnZQ50VkExP

Ciao/Fin

We also find that employment increased, and used LLM to look at Google reviews & ratings about bookshops.

Readers appreciate discovery, suggestions & events organized by bookshops. This is in line with the “service effort” mechanism in settings where otherwise there would be free-riding. 5/

Not really. We also find that the *variety* of books purchased by readers went up. Books that had a near-zero market share before FBP... started being purchased afterwards.

So there is a possible trade-off! 4/

Indeed, comparing with the same Italian books sold in Switzerland at the time (Italian is an official language there too! And there is no regulation of books in CH), final prices to readers went up, especially among independent bookshops that are very common in ITA.

End of the story? 3/

A regulation (FBP) was introduced in Italy in 2011 and allowed publishers to set the price of books while bookshops were restrained from discounting them.

This sounds pretty bad for readers. 2/

🚨 !Paper alert! 🚨
Do you like books? Then read our new paper on price and non-price effects of regulation in the market for books! With
@cgenakos.bsky.social, Mario Pagliero & Lorien Sabatino.

What’s the paper about? 🧵

YouTube video by Digital Markets Research Hub Tommaso Valletti: Is Competition Policy Dead? What Is Next? Competition Policy In Turbulent Times

Antitrust "technocrats have failed...and they're defending their job" @tomvalletti.bsky.social youtu.be/e7Unsy3jgbA - not talking about the DMA 😉

Result:
Large increase in Chinese apps and innovation in China

And also:
Large increase of Chinese apps in *foreign* Asian countries

There is much more in her paper. You can read it here 👇
dropbox.com/scl/fi/b0i5w...

Very interesting JMP from Jie Zhou (MIT) who's on the job market

So relevant given today’s discussion in EU on how protect from further digital colonisation while spurring native innovation

Context:
China Great Firewall: China blocked foreign apps and regulated the internet (for political reasons)

Political Power and Market Power Does market power lead to political power? This longstanding question, raised by Louis Brandeis in 1914, remains strikingly relevant today. As industries ...

Looking at the US presidential inauguration, the link between market power and political power has never been so evident.

If you also found that very striking, please read our blog with Bo Cowgill and Andrea Prat
corpgov.law.harvard.edu/2025/02/06/p...

The Trends and Cases That Will Define European Antitrust in 2025 - ProMarket Four antitrust and competition experts predict the trends and cases that will define European antitrust in 2025. Enforcement of the Digital Markets Act in 2025 Marco Botta, European University Institu...

My predictions for European antitrust in 2025 (EU + UK), as well as those by Marco Botta, Justus Haucap and Stefan Thomas

www.promarket.org/2025/01/14/t...

Well, no. We test that, and find no evidence. It’s in the paper, worth reading it first perhaps

Incidentally, a minor detail: it’s not what we find

Revised version of our paper with Bo Cowgill and Andrea Prat just out.

We document how mergers in the US are followed by large and persistent increases in lobbying activity. Firms with market power also try to gain political power.

www.nber.org/papers/w33255

Synergies have to be cognizable & merger specific. In telecoms, perhaps they come from spectrum or network sharing: but then there are alternatives that are less anticompetitive than a merger. Plus we have 30 yrs of no evidence of them after mergers. Bottomline: it’s a bad (& unenforceable) remedy.

Sir John Vickers gave a keynote at ACE. His views on the UK Vodafone/Three merger - see the images.

Knowing Sir John, who’s the epitome of moderation, this is quite some scathing criticism directed to the Competition and Markets Authority proposed flawed approach.

Is there still time to re-think?

I welcome it as a way of addressing structural competition issues. But to be frank its application is probably doomed because of lack of resources among enforcers. So don’t expect much in practice

Congratulations to Guatemala. I am referring to EU and UK, which I know better

IS COMPETITION POLICY DEAD?

Probably moribund, as I argue here