Minority Share Acquisitions, Innovation and Competition (MINCOM)
Supported by a grant from the French National Research Agency (ANR) awarded in 2023, the MINCOM project officially launched in April 2024.
The project investigates the competitive and innovative implications of partial ownership structures. Specifically, we examine how horizontal minority equity stakes—where a firm acquires a passive stake in a competitor—affect both parties' incentives to invest in R&D and innovate. While competition authorities traditionally scrutinize full mergers, partial acquisitions often remain unexamined despite their potential to soften product market competition and reduce overall innovation. Additionally, the project explores the strategic adjustments firms make following the breakdown of cartel agreements, providing new empirical insights into post-collusion market dynamics.
The first working paper from this research agenda is now available as a CEPR Discussion Paper and can be accessed below.
Research Team
- Sven Heim — Principal Investigator
- Emilie Feyler — External PhD Candidate (NERA New York & Mines Paris – PSL)
- Santiago Espinosa-Moyano — PhD Candidate (Mines Paris – PSL)
Working Papers & Outputs
Minority Stakes, Technological Overlap, and Innovation
Abstract: Minority stake acquisitions reduce innovation when the acquirer's and target's technologies overlap. Using worldwide patent, deal, and financial data for 1997-2020 and a staggered difference-in-differences design with propensity-score-matched controls, we find that five years after such an acquisition the cumulative patent output of acquirers and targets is 11.4% and 4.8% lower than that of comparable untreated firms. The decline is not confined to marginal, low-value filings; citation-weighted output falls in step with patent counts. It is concentrated in acquisitions with technological overlap -- minority acquisitions between firms that do not share technology space show no comparable decline - and within treated firms both parties cut back in the classes they share with their counterpart, while targets' patenting outside the shared space rises relative to matched controls. The target response is strongest in acquisitions whose shared classes matter to both parties. The pattern points to reduced competitive incentives rather than financial constraints or the elimination of duplicative R&D. Most competition regimes do not scrutinize minority stake acquisitions, yet the cumulative innovation shortfalls we document are economically large and persistent.
Download the most recent version (PDF) →After Collusion: Cartel Endings and the Reorientation of Minority Ownership
Abstract: We follow firms found by the European Commission to have participated in cartels, linking decisions issued between 2001 and 2022 to firm accounts and worldwide transaction records, and ask how the end of explicit coordination changes the ownership links they form. In the first three years after the recorded end of the infringement, a member's annual probability of acquiring a horizontal minority stake rises by 2.8 percentage points relative to matched comparison firms. Against a pre-ending rate of 1.8 percent, the annual probability more than doubles. Full acquisitions and overall minority investment show no comparable change, we detect no corresponding response on the target side, and the same firms' minority investments shift from non-horizontal toward horizontal targets. The acquired firms are not former cartel partners, and most operate outside the industry named in the decision. Cartel endings are thus followed by a broad reorientation of partial ownership toward competitors, through transactions that leave every target a separate company and largely escape control-based merger review.
Download the most recent version (PDF) →