The Merger Review Policy of EVP Ribera takes shape
Executive vice president (EVP) Ribera has been given the “mission impossible” of developing a “new approach” to competition policy. “Support[ing] European businesses to innovate, compete, and lead the world and contribute[ing] towards our wider objectives in competitiveness, sustainability, social justice and security.” EVP Ribera’s task was to revise the European Commission (Commission)’s decades-old guidelines for the assessment horizontal mergers (). The Commission launched a wide-ranging consultation on May 8th, not only regarding the HMG but also the Commission’s guidelines for the assessment of non horizontal mergers (the NHMG, and together with the HMG the Merger Guidelines). The Consultation is not only a broad call for input, but also a background on what the antitrust industry can expect from EVP Ribera. EVP Ribera’s Mission Letter raised questions about how broader European Union (EU) policy objectives could or should be integrated into the Commission’s assessment of transactions under the EU Merger Regulation (EUMR). . . It is important to take into account the disruptive changes that have occurred in our societies and economies in the last 20 years, including the digitalisation. We must also ensure that the importance of innovation, resilience and investment intensity in the face of the urgent needs of the European Economy is given the appropriate weight. . . can
ensure that our merger control policy continues to serve people, drive innovation, and strengthen Europe’s resilience and leadership.”EVP Ribera’s Mission Letter and comments on the Consultation, as well as the text of the Consultation itself, suggest that the future Merger Guidelines will reflect a thorough-going review of the basic principles of EU merger control, not merely a technical update to reflect EU Court judgments and the Commission’s decisional practice in the years since the Merger Guidelines’ adoption.[we]The Consultation. The Consultation is divided into two parts, a General Questionnaire
and a targeted consultation with an In-depth Questionnaire
covering “topics that are key for the EU economy, namely competitiveness and resilience, market power, innovation, decarbonisation, digitalisation, efficiencies, defence and labour considerations.” Alongside the targeted consultation, the Commission published seven papers that will be the basis for broader engagement with stakeholders, including through dedicated events and workshops. The Consultation refers back to the Commission’s Political Guidelines from July 2024 and EVP Ribera’s mission letter as well as the Competitiveness Compass of January 2025. The Consultation also draws on the September 2024 Draghi report
, which focuses on European Competitiveness. It calls for a new approach in EU merger policy that allows European companies to achieve greater size and introduces a “innovation defense”. The Commission will then publish its own evaluation and the feedback it has received, followed by a public consultation on revised merger guidelines. The Commission will also publish an impact analysis. The Commission intends to adopt the final revised Merger Guideline in late 2027, but it is expected that any policy changes resulting from the Consultation will be implemented well in advance.The general questionnaire. The General Questionnaire notes that “in the respective twenty-one and sixteen year period since the adoption Guidelines, there have been significant trends and developments which have changed the dynamics in competition.” . . In light of these factors which are equally applicable to both and the Commission proposes to revise both set of guidelines in an holistic exercise. The revised merger guidelines should also provide greater transparency and predictability to the business community about how the Commission assesses mergers today. The General Questionnaire asks a number of broad questions including whether the Merger Guidelines “allowed for the Commission to identify transactions that significantly hinder effective competition in the Internal Market;” “contributed towards promoting competition”; and “provided correct, clear and comprehensive guidance regarding merger assessment”, as well as “legal certainty and transparence”. The General Questionnaire also asks about the costs and benefits of having Merger Guidelines; the objectives the Merger Guidelines do or should pursue; possible inconsistencies or contradictions; and whether the Merger Guidelines contribute to more consistent enforcement, as well as soliciting suggestions for simplification and cost-reduction.
Although the Commission commonly asks such threshold questions about whether antitrust policy documents should be renewed, in practice there is little or no doubt that the Commission plans to issue revised Merger Guidelines. The General Questionnaire, on the other hand asks a number of questions that could indicate changes in the structure or content of future guidelines. The General Questionnaire, for example, asks if “the distinction between the effects of horizontal mergers and non-horizontal ones
is still relevant” and if it would be better to have separate guidelines for horizontal and nonhorizontal merges or one document. The General Questionnaire asks if and how future guidelines should account for sectoral regulations, such as telecommunications and energy. telecommunications, energy) and particular features of certain sectors (e.g., longer investment cycles, innovation intensity).[Merger]The General Questionnaire also seeks input on the Merger Guidelines’ treatment of factors used to assess market power, such as market shares, concentration level, barriers to entry or expansion, and diversion ratios, whether certain aspects are unclear or outdated and whether other metrics should be included. The Commission also seeks input regarding the assessment of coordination risks, foreclosure risks, and anti-competitive impacts that may arise from transactions that don’t create or strengthen dominant positions. The “competitiveness”, which includes the benefits of scale, security of supplies, resilience of the EU’s economy, and increased innovation and investments, is one of these. The General Questionnaire specifically seeks inputs on the potential harms and rewards of consolidation in global strategic industries, digital and deep tech innovation, clean and resource efficient technologies, and biotechnologies. (e.g. IoT cloud, quantum, tele, data, advanced connection, cybersecurity, or AI). Similarly, the General Questionnaire calls for input on the treatment of innovation and other dynamic elements; sustainability and clean and resource-efficient technologies; digitalization; efficiencies; public policy, defense and security; and labor market considerations.[HMG and NHMG]The In-depth Questionnaire. The In-depth Questions “focuses on in depth and technical aspects related to EU merger controls” on seven topics: competitiveness, resilience, assessing market power by using structural features and market indicators, innovation and other dynamic elements of merger control; sustainability and cleaner technologies; digitalization and efficiencies; as well as public policy and security considerations. These questions appear to be the Commission’s attempt to collect evidence to implement the Mission Letter mandate to modernize EU Competition Law. In relation to competitiveness (Topic A), In-depth Questions calls for reflection to determine whether EU merger control should be adapted to help start-ups and scale-ups to scale up on global markets while maintaining a level playing ground. The In-depth Questionnaire identifies four specific topics for further investigation: scaling up; resilience and value chains; enhancing investment and innovation; and globalization.[EUMR]The In-depth Questionnaire notes that productivity tends to increase scale, and increasing scale through mergers and acquisitions may help firms become more productive. Acquisitions of existing businesses can also help a company expand into new Member States or to increase its global reach to compete with global giants. On the other hand, market power resulting from mergers can lead to price increases, diminished quality or innovation, and a reduced number of suitable suppliers, all of which can negatively impact the competitiveness of other businesses.
Mergers may also have a negative or positive impact on the EU’s resilience in the face of global shocks and the need for a diverse, competitive supply base (e.g. For example, for raw materials and other inputs needed for the green and digital transformations. On the one hand mergers can provide companies with the inputs they require to compete. This includes the integration of activities across the value chain. Integration of competitive EU suppliers could reduce dependence on external sources. On the other hand mergers can result in lower-quality products, less innovative inputs or a reduction in the number of suppliers. This will have a negative impact on companies’ resilience and competitiveness, not only in Europe, but also globally. A variety of businesses in the EU Single Market will help firms to be more dynamic and resilient. By contrast, less competition risks making an economy “brittle” and thus less resilient.
Scale resulting from M&A transactions can also impact incentives for investment and innovation. Scale can provide companies with benefits like lower costs, better capital markets access or R&D&I capability that increase their ability for investment and innovation. While company size is not always a good indicator of an organization’s ability to innovate and invest, many of the most innovative companies in sectors like pharma, biotechnology or digital are small and mid-sized businesses. While scaling up companies with disruptive technologies can help disseminate important innovations across the economy, the acquisition of nascent competitors by large established players to protect their market power (so-called “killer acquisitions”) might harm innovation.[is]The In-depth Questionnaire observes that the degree of globalization affects the geographic scope of competition in relevant antitrust markets. The competition in the EU can be affected by imports from outside the EU, but also by other competitive advantages that market participants receive. They do not provide any rules of thumb, except for market shares over 50% in a horizontal merge, because there are situations where a merger may not be harmful to competition. For example, if the parties to the merger are not competitors, or if the competition on the market is intense or a large market share is only temporary. To achieve this, the Commission would like to adopt stricter indicators or rebuttable assumptions to help identify mergers more easily that will likely result in a significant impediment of effective competition. The Commission may also establish a more comprehensive framework that relies on alternative approaches for assessing market power and, in particular, those that have emerged from its case practice. Capacity shares, for example, are frequently used as structural indicators. Other market features that are relevant include diversion rates, profit margins or the distribution of spare capacity. These market features are especially relevant when there is no dominant position or a highly differentiated market. The revised Merger Guidelines could provide more guidance on how to determine when merging companies can be considered as close competitors, or how to identify mergers which would eliminate an important competitive force. Even if the combined market share or concentration levels aren’t particularly high, a merge can still have anticompetitive effects if it increases the risk of coordination. The In-depth Questionnaire asks for reflection on the framework for assessing coordinated effects in light of recent developments, such as algorithmic pricing. Similarly, the In-depth Questionnaire calls for reflection on whether the Merger Guidelines’ “ability-incentive-effects” framework for assessing foreclosure risks in non-horizontal mergers should be amended.
In relation to innovation and other dynamic elements in merger control (Topic C), the In-depth Questionnaire notes that mergers can impact innovation competition in both directions – they may increase the ability of the merged firm to innovate but also harm innovation competition and thus incentives to invest in R&D. The effects of mergers on innovation are often more difficult to predict than price effects, so the challenge is to further develop a sufficiently accurate yet administrable framework for assessing dynamic merger effects on innovation.
Similarly, the acquisition of a potential competitor with a promising product in development or notable R&D capabilities can accelerate commercialization of improved products or prevent future competition (e.g. If a merger results in the discontinuation of an innovative product or research line, or increases barriers to expansion or entry, then it is a merger that has failed. The challenge is to identify circumstances in which the acquisition of a potential competitor may increase or stifle competition, not only in horizontal but also in non-horizontal mergers.
Topic D addresses the role of sustainability and clean technologies. The In-depth Questionnaire states that merger control can play a role in allowing procompetitive acquisitions to support a transition to a sustainable and clean economy while preventing mergers that have negative effects on sustainability and clean innovation goals. For example, an incumbent may acquire a disrupting innovator who offers a green product in order to delay it or cannibalize (green killer acquisitions) or a merger could reduce incentives to innovate and invest in green products and technologies. Non-horizontal merges can also have a negative effect, for example, by removing or reducing the access to products or services that are less energy- or carbon-intensive (including batteries, renewable components and recycling infrastructure), which generate less waste, or require fewer raw materials. Mergers provide the leverage to invest in decarbonization and cleaner technologies and products, as well as more energy-efficient infrastructure and solutions. Vertical integration can also improve the circular use of recycled or raw materials, and allow companies adopt more innovative and efficient resource management across a larger segment of the supply chain. Nevertheless, it is important to assess carefully in order to avoid greenwashing and ensure that the benefits claimed are actually realized after the merger. Mergers shouldn’t make clean products and services, such as those related to renewable energy, sustainable recycling and waste management, resource-efficient digital solutions, electric cars, etc., less accessible or affordable for businesses and citizens. Key questions in this regard include the methodology and parameters to be included in the competitive assessment to take due account of sustainability considerations, as well as the quantification and verification of green incentives and efficiencies.
Digitalization (Topic E) has of course been a key feature of markets addressed in EUMR reviews for decades. In-depth Questionnaire states that a forward-looking assessment is often required to capture the true impact of a merger in these markets, especially when it involves the acquisition of an emerging player or market. In fast-moving markets, killer acquisitions of complements require careful assessment, because in such markets a complementary product or player of today may very quickly become a substitute.
According to the In-depth Questionnaire, leading companies in the digital and tech sectors commonly seek to acquire complementary businesses or key inputs (e.g., data, technology, user traffic, but also talent, compute capacity and others) with the aim of strengthening their position in core markets. This strategy can lead to increased innovation. On the other hand, developing or expanding an ecosystem of related products and services may entrench an incumbent’s position, thus making it harder for rivals to enter, expand, or innovate.
This type of business strategy does not easily fit into the traditional distinction between horizontal and non-horizontal mergers, because fewer transactions are purely horizontal
,
vertical or conglomerate in nature, and the lines between horizontally or non-horizontally linked product markets become increasingly blurred. For instance, in mergers involving companies with activities across several product markets, products often need to interoperate with each other or are offered as part of an ecosystem of related services.
Digital markets also raise questions about how forward-looking merger assessments should be, what kind of future changes should be taken into account, and what facts and evidence should be considered. This is particularly challenging in nascent and fast-moving markets, where historical market shares may say little about future effects on competition.
Finally, certain digital mergers raise privacy and data protection concerns, for instance when a merger leads to the acquisition of data or the combination of datasets. Competition for customers can be based on privacy settings. The acquisition of a company that prioritizes customer data protection may reduce the choice of privacy-focused services. Privacy concerns may also affect the credibility of (alternative suppliers), e.g. if customers find it difficult to work with suppliers who process data on non-EU servers. The question is whether and if so how privacy and data protection objectives enshrined in EU law should be taken into account as parameters of competition.
In relation to efficiencies (Topic F), the In-depth Questionnaire notes that otherwise harmful mergers may result in “efficiencies” that may counteract potential harms to consumers. Mergers may result in cost savings which are passed on to consumers as lower prices or improved products and services. Vertical and conglomerate mergers can provide greater scope for efficiency, e.g. in the form of an elimination of double margins or better coordination of marketing efforts.
Efficiencies should be assessed against the EUMR’s legal mandate to protect effective competition and the clarification that any efficiencies should be to the advantage of intermediate and ultimate consumers. The Merger Guidelines state that cognizable efficiency must be beneficial to consumers, merger-specific, and verifiable. When there is an asymmetry in the benefits and harms of alleged anticompetitive actions, the exercise of balancing harm and efficiencies becomes more complex. Another challenge arises from timing differences, as investments usually materialize over a long period of time, whereas anticompetitive effects may materialize immediately.
The question arises which type of evidence or metrics are appropriate for the assessment of efficiency claims and the required likelihood of materialization to accept efficiencies. For example, the assessment of efficiencies concerning improved quality of products or services is typically linked to consumers’ willingness to pay for higher quality, and merging companies may find it difficult to submit reliable and robust evidence in support of the increase in quality.
Finally, efficiencies have to be merger-specific. The Commission should consider whether the same benefits can be achieved in a more beneficial way, such as through a cooperative agreement. It may be difficult to determine the viability and existence of an alternative. Topic G combines public policy, labor market and security considerations. These topics, although very different, raise the question of how EU policy goals beyond competition policy can also be integrated into EU merger reviews. While merger control is primarily focused on ensuring that mergers don’t harm consumers, vibrant and healthy competition can also indirectly contribute to other policy goals. Where companies become too powerful, they may become too-powerful-to-care. When companies become essential, they may become too big to fail and, therefore, more difficult to regulate. The HMG and NHMG do not include specific guidance on mergers relating security or defense. Members may believe that a merger will impact legitimate national security concerns and, therefore, seek to intervene based on public safety grounds. However, merger regulations can prevent the harmful market power of non-European inputs that are relevant to EU defense. The In-depth Questionnaire asks for feedback on the revised Merger Guidelines and how they should address the interaction between the security and defense interests of Member States and the Commission’s assessment of competition. Similarly, the In-depth Questionnaire seeks feedback on how to undertake a potential balancing of interests between defense and competition objectives in cases involving dual-use goods.
Mergers can also impact media plurality. Article 21(4) EUMR permits Member States to take “appropriate measures to protect legitimate interest,” such as the “plurality” of media. In assessing mergers, the Commission can also consider the impact on media plurality of a loss in competition. Media mergers and acquisitions could reduce consumer choice. This could lead to a situation where a few dominant media companies could exert considerable influence over democratic processes through public opinion. The Commission will consider this dynamic, alongside traditional factors like price and quality, when evaluating the implications of mergers and acquisitions in the media sector, as well as related sectors such as artificial intelligence.
Mergers can also significantly impede competition in labor markets by shifting the balance of power between employers and workers. Monopsonies on labor markets can result in lower wages, higher rates of unemployment, worse working conditions and higher prices. EU merger control assessments do not yet consider the effects of mergers directly on labor markets. The existing HMG assesses the potential effects of a merger on buyer power in a more general way. The question therefore arises whether the revised Merger Guidelines should provide guidance on when an expected significant loss of competition through the exercise of buyer power in labor markets leads to a significant impediment to competition.
Mergers may also raise concerns about job losses due to restructuring and offshoring. These effects are not a result of a shift in market power. The EUMR does not cover these effects, and the revised Merger Guidelines will not address them. The In-depth Questionnaire also notes that cost savings resulting from restructuring or offshoring are unlikely to be passed on to consumers and thus should not be accepted as efficiencies.
Conclusion. The Consultation is a call for evidence on many topics. The review process is expected to last for over two years, before the revised Merger Guidelines can be adopted. The Consultation does provide useful background information on the issues that the Commission considers to be important, and it gives some strong hints as to its direction. Changes emerging from the review process may be seen in practice well before new Merger Guidelines are finalized.
From a structural perspective, it seems likely that the current HMG and NHMG will be replaced by a single set of Merger Guidelines addressing horizontal, vertical and conglomerate mergers. A holistic approach will allow for a more nuanced assessment of transactions that don’t fit neatly in a horizontal or nonhorizontal box. The revised Merger Guidelines are likely to include a more detailed treatment of metrics other than sales shares and market share. The revised Merger Guidelines may also address market features such as investment cycles and innovation intensity, as well as applicable regulatory frameworks, to the assessment of notified transactions.
The Commission also apparently aims to provide more guidance on parameters raising red or yellow flags. This guidance would allow antitrust advisors to identify transactions that are likely to be challenged. On the other hand, efforts to develop presumptions of anti-competitive effects based on market shares or other individual parameters will no doubt be controversial.The revised Merger Guidelines can also be expected to provide more detailed guidance on hot-button issues such as so-called killer acquisitions, the role of ecosystems in digital and tech transactions, plurality and artificial intelligence in the media sector, privacy as a parameter of competition, the assessment of mergers in the defense sector and buyer power in labor markets.Perhaps most importantly, the Consultation reflects the Commission’s efforts to integrate broader policy considerations set out in EVP Ribera’s Mission Letter, the Political Guidelines and the Competitiveness Compass, as well as the Draghi Report, into EU merger policy. The Consultation highlights the relationship between criteria like innovation, resilience and sustainability, as well as security and other policy objectives, and the EU’s competitive landscape. The Commission is examining how EUMR review could be used to promote EU goals, even though many of these issues have been addressed by other EU regulatory frameworks.
