RETHINKING EFFECTS OF INNOVATION IN COMPETITION IN THE ERA OF NEW DIGITAL TECHNOLOGIES

Abstract

The new technologies, digitalization, algorithms, big data, artificial intelligence are already changing our lives and commercial habits. The technological revolution with new products and services is transforming the market and business operators. There is a general understanding that new technological improvements benefit competition. The question is, whether competition models are adequate and ready to deal with the challenges associated with new technologies. In recent years, there has been a revived interest in the concept of innovation and its application in competition policy and law. However, proper examination of its influence on competition policy is lacking. During the last decades, there have been attempts to explain the relationship between competition and innovation by including various innovation models in competition analysis. The innovation instruments have developed. Despite these developments, there are still diametrically opposed theoretical approaches, from completely ignoring the concept of innovation in competition law to the ones that develop a specific economic test in competition analysis. This paper will try to analyze and compare different approaches to the intersection of competition and innovation. Systematic theories that assess innovation in the context of competition are scarce. Competition authorities have been focused on issues of consumer and social welfare, rather than on the impact of innovation on the competition. * This work has been fully supported by the University of Rijeka under the project uniri-drustv-18-252 “Legal aspects of the digital transformation of society”. ** Ana Pošćić, University of Rijeka, Faculty of Law, Rijeka, Croatia; aposcic@pravri.hr. *** Adrijana Martinović, University of Rijeka, Faculty of Law, Rijeka, Croatia; adrijana@ pravri.hr. Intereulaweast, Vol. VII (2) 2020 246 The idea is to try to define the role of innovation in competition analysis. The question is whether competition law needs new tools in order to understand new developments and innovations. The authors argue that competition has its own instruments that can be applied to new models with certain adaptations. Certain regulatory instruments are necessary, but they can be implemented without stifling innovation and the development of new technologies. The authors attempt to offer possible solutions for the existing challenges based on the state of art research. The challenges associated with the market definition and market power are explained. It is argued that competition analyses should acknowledge that innovation is essential for competition in the digital era.