Innovations and Antitrust

Antitrust laws do not penalize firms that have succeeded because of ‘superior skill, foresight and industry’, that is, because of either the entrepreneurial talents they used or the innovations they adopted, even if the use of such skills and the successful innovations led to dominance in some markets.1 Courts faced with defendants possessing market power must find that this power was obtained because of ‘anticompetitive’, or ‘exclusionary’ practices. When proposals for mergers are submitted to the respective regulatory agency, the government official must decide whether or not the merger will create or enhance substantial market power.