The European Commission recently released a draft of new merger guidelines, signaling a shift in how the bloc evaluates business combinations. The proposed rules aim to replace the 2004 Horizontal Merger Guidelines and the 2008 Non-Horizontal Merger Guidelines, with a focus on modernizing the assessment process. The draft seeks to balance arguments for a more permissive framework to create “European champions” against the need for a predictable, principle-based approach.
Updating the rules of competition
The Commission intends to codify several theories of harm that have emerged in recent case law. These include concerns over access to commercially sensitive data, as seen in the UMG/Downtown case, and “entrenchment” where structural barriers to entry increase without foreclosure evidence. The draft also introduces a new theory of harm for labor markets, treating companies as buyers and workers as sellers to assess if a merger increases purchasing power and harms wages.
Vertical mergers involving no direct relationship will face scrutiny under updated foreclosure strategies, particularly regarding data and interoperability. The guidelines also emphasize “dynamic competition,” looking at forward-looking incentives rather than just static indicators. This approach is vital for sectors undergoing digitalization or the green transition.
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Assessing harm versus benefit
A significant change involves how efficiencies are treated. The draft proposes applying the same “more likely than not” standard to benefits as is used for harms. Efficiencies will be analyzed alongside potential anti-competitive effects rather than just after the fact. The Commission will also use a fact-based assessment for the timeline of benefits, potentially allowing longer periods for innovation to materialize in certain markets.
The guidelines set out a sliding scale for assessing mergers. If a deal causes significant immediate harm, the benefits must be substantial and certain. Conversely, if post-merger constraints remain strong, the likelihood of efficiencies materializing drops. This shift requires companies to prepare arguments for pro-competitive benefits well before signing deals.
This change in methodology could reshape how firms view consolidation. If the Commission is willing to weigh a merger’s benefits against its harms, companies that previously abandoned deals due to regulatory fear might reconsider. However, the guidelines also warn that mergers increasing market power to the detriment of consumers will still face rejection, regardless of scale benefits.
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Scale and innovation shields
The draft includes an “innovation shield” to address acquisitions of small, innovative firms. This establishes a presumption that deals meeting certain conditions—based on market shares and the presence of alternatives—will not raise concerns. The framework may also influence how Member States use call-in powers, potentially offering more deal certainty.
Additionally, the guidelines emphasize “mergers for scale,” acknowledging that geopolitical and trade contexts have changed. The Commission signals a willingness to allow deals that increase a firm’s scale, competitiveness, and resilience, particularly in capital-intensive global industries. However, it draws a line between pro-competitive scale and market power, emphasizing that benefits must ultimately flow to consumers.