What will future EU merger control look like in practice? As the Commission publishes its draft new Merger Guidelines, its envisaged policy direction is becoming clearer. In our latest insight, we explore what these developments mean for deal certainty, regulatory risk and strategy for companies navigating complex transactions.
After much anticipation, the European Commission’s draft new Merger Guidelines are finally there for everyone to read and comment on.
Over the last few months, there has been a lot of speculation on the path the Commission would take with these draft new Guidelines. Some predicted that the new rules would amount to a carte blanche for creating “European Champions”. Others envisioned a framework aimed at rigorous enforcement with a focus purely on consumer welfare and choice, with the strengthening of European competitiveness to be achieved primarily through the completion of the internal market. Across Europe, this debate is framed by a broader concern: how can the EU sustain prosperity and investment in the face of American scale and Chinese state‑backed industrial strength, without sacrificing the fairness, legal certainty and rule‑based order that underpin its social market economy and the success of the internal market?
So which path did the Commission choose? In summary: a bit of both, actually. On the one hand, the draft Guidelines clearly attach much greater value to positive effects of mergers on innovation, investment, security and resilience that may outweigh the negative effects on competition and that support and boost the EU’s global competitiveness. On the other hand, the new Guidelines also introduce a string of novel theories of harm which, although partially tested in previous cases, are (almost) absent from the current Guidelines.
Theories of benefit
The draft provides a much broader perspective for assessing proposed mergers and acquisitions. In particular, the Commission explicitly recognises that mergers may increase procompetitive scale while maintaining effective competition in the internal market. This may allow firms to reach the necessary size to compete in global markets. The Commission now explicitly recognises that this can be procompetitive and have a positive impact on the EU economy and its competitiveness, stimulating innovation and investment.
The Commission explicitly welcomes mergers that promote:
- innovation and technological progress (introducing an “Innovation Shield” for unproblematic mergers involving small innovative companies, including start-ups and R&D projects);
- market integration and expansion, and that help in achieving the necessary scale to compete globally;
- security and resilience (e.g. critical infrastructure and inputs and defensive readiness); and
- sustainability (acknowledging that clean technologies may require larger and longer-term investments).
However, the Commission still requires the parties to demonstrate that such effects are a direct result of the merger or acquisition. In that context, early engagement on efficiencies during the review process, including at the pre‑notification stage, is expressly welcomed.
Theories of harm
Still, the above relaxations of enforcement policy are only one part of the story. In some areas, the Commission’s enforcement policy may also become stricter.
First, there is a stronger focus on dynamic and nascent competition: the draft introduces dedicated sections on loss of innovation and potential competition, including guidance on assessing dynamic harm and “killer acquisitions”. Second, the draft introduces an entire section on the potential negative effects where a firm acquires a very broad portfolio of non-competing products or activities. Third, the draft acknowledges that algorithms/AI may ease tacit collusion, and it addresses (digital) ecosystems and data as sources of market power.
The draft also places more attention on potential negative effects of minority shareholdings and structural links, explicitly addressing non‑controlling shareholdings and overlapping ownership. Finally, it devotes more attention to purchasing markets (including labour markets) and includes a section on Member State measures to protect legitimate public interests.
Looking forward
Ultimately, the draft Merger Guidelines reflect a balancing act: becoming more supportive of European companies scaling up in global markets, while at the same time ensuring that European businesses and consumers continue to benefit from effective competition within the internal market.
Please reach out our expert team if you would like to discuss the above mentioned implications for your organisation.
