Do acquisitions boost or hinder innovation in the EU digital sectors?
This policy brief examines the long-term impact of corporate acquisitions on innovation in Europe’s digital sectors, finding a consistent decline in patenting activity among acquired firms. High-patenting firms show a sharper drop in innovation output compared to low-patenting counterparts, suggesting strategic motives such as market consolidation or suppressing competitive innovation. While alternative explanations—like centralized patenting under parent companies—remain plausible, the results highlight the need to distinguish genuine innovation stagnation from shifts in how innovation is documented.
For EU policymakers, the findings underscore the importance of scrutinizing acquisitions in digitally intensive sectors under frameworks like the Digital Markets Act and Digital Services Act. Strengthening merger reviews to assess innovation-related risks and aligning regulatory approaches with the EU’s Competitiveness Compass and Digital Decade goals can help safeguard innovation ecosystems. Balancing antitrust oversight with proactive support for startups and R&D—through initiatives like the European Innovation Council—will be critical to preserving the EU’s technological leadership and preventing the erosion or relocation of cutting-edge research.
BELLO Michela;
RABELLOTTI Roberta;
RAVANOS Panagiotis;
SMALLENBROEK Oscar;
TESSARIN Milene;
2025-12-10
European Commission
JRC144530
https://publications.jrc.ec.europa.eu/repository/handle/JRC144530,
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