In its recent decision on the Dow-DuPont case, the European Commission has adopted an innovation theory of harm (IToH), which holds that even horizontal mergers whose static effects are benign may be regarded as anticompetitive in a dynamic perspective, as mergers generally stifle innovation....

[We analyze a dynamic model of repeated innovation where inventors may be acquired by an incumbent or else challenge its leadership. In the short run, acquisitions always spur innovation because of the invention-for-buyout effect. In the long-run, however, acquisitions may stifle innovation...