The European Commission on Thursday unveiled a proposal to reshape how mergers are assessed in the EU, allowing companies greater scope to argue that their transactions deliver benefits such as sustainability, resilience, investment and innovation.
The draft revision would mark a departure from the Commission's traditional focus on consumer harm and the risk of reduced competition as the central yardsticks for merger approval. Under the proposal, companies worldwide could put forward evidence that a deal increases their ability to invest, strengthens incentives to invest, or supports development of new or improved products, services, distribution or production methods.
The proposal makes clear, however, that these new avenues of defence are not intended to replace scrutiny of conventional competitive risks. Regulators are expected to continue to concentrate on scenarios where a deal could lead to higher prices for consumers or damage rival firms, and the bar for proving positive effects is likely to be high.
An innovation shield is included in the package and would prevent intervention by competition authorities in transactions involving start-ups or research and development projects that are likely to enhance competition. The shield is designed to protect certain nascent activities that might otherwise be disrupted by enforcement action.
But the shield contains explicit limits. It would not apply to deals in which the acquirer is the largest participant in the relevant market, nor would it cover targets designated as gatekeepers under the Digital Markets Act. Those exclusions mean that acquisitions involving dominant incumbents or firms subject to the gatekeeper label would remain fully exposed to conventional merger assessment.
The Commission said it will accept comments and feedback on the proposal until June 26 ahead of any move to implement the new rules.
For corporate deal teams, regulators and investors, the changes represent a recalibration of how merger benefits may be presented and weighed against risks to consumers and competitors. The proposal aims to provide more flexibility for transactions framed as strengthening Europe’s industrial or technological position, notably following calls from some EU countries and companies - led by the telecoms sector - for a more permissive approach to deal-making intended to foster the creation of larger European players able to compete globally.