A strong antitrust policy—especially for horizontal mergers, alliances, and collusive behavior—is fundamental to innovation. While it is fashionable today to call for mergers and alliances in the name of globalization and the creation of national champions, these often undermine the creation of competitive advantage. Real national competitiveness requires governments to disallow mergers, acquisitions, and alliances that involve industry leaders. Furthermore, the same standards for mergers and alliances should apply to both domestic and foreign companies. Finally, government policy should favor internal entry, both domestic and international, over acquisition. Companies should, however, be allowed to acquire small companies in related industries when the move promotes the transfer of skills that could ultimately create competitive advantage.