Minority Share Acquisitions, Innovation and Competition (MINCOM)

Funding: French National Research Agency (ANR-23-CE26-0017)

Coordinator: Mines Paris – PSL

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 in Rivals and Innovation

with Emilie Feyler, Yossi Spiegel, and Florian Szücs

CEPR Discussion Paper No. 20917

Abstract: When a firm acquires a minority stake in a competitor, both parties subsequently innovate less. We document this using patent data from 34 countries over the period 2001-2019. In a staggered difference-in-differences design with matched controls, patent counts and citations fall by 9-15% within five years for both targets and acquirers. The decline is concentrated in technology classes where the two firms directly compete. Non-horizontal minority acquisitions between firms that do not share technology space have no effect. The within-firm pattern points to reduced competitive incentives rather than financial constraints or post-deal disruption. Most competition regimes do not scrutinize minority stake acquisitions, yet the innovation effects we document are economically large and persistent.

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