The wait has ended in the offices of the European Commission. The Community executive will release the drafts on the new guidelines on business mergers this Thursday for public consultation. This is one of the pillars on which the European institutions rely a good part of their competitiveness strategy to achieve that the continent's companies acquire scale in a context of economic and geopolitical uncertainty.
Before the drafts are made public, the head of Competition at the Commission and executive vice-president, Teresa Ribera, has wanted to make it clear that, although the regulatory framework will not change in itself, the new guidelines are aimed at updating the way in which merger operations between companies are examined to reflect current market realities.
In this regard, Brussels seeks to adapt its analysis to an environment in which factors such as digitalization, the fragmentation of global trade, or growing geopolitical tension have profoundly altered competitive dynamics. The intention is not to modify the rules, but to reinterpret them under a lens more in line with the present.
A far-reaching technical document
Thus, the Commission arrives at the presentation of a document of more than 100 pages that is born with the will to “self-limit ourselves to evaluating any operation, but also to provide clarity to companies” on how to measure and justify their benefits. As explained by Ribera, it is “a passionate work of more than a year”, with monthly sessions in different general directorates to integrate economic science, the legal approach, and the response of the courts. This effort reflects the growing complexity of business concentration processes such as community services indicate, where it is no longer enough to analyze prices or market shares, but it is necessary to incorporate more sophisticated variables such as innovation, sustainability, or resilience.
In the process of developing this proposal, various sectors pressured Brussels to relax its traditional assessments. As a result, for the first time, broader criteria will be introduced with the aim of identifying how “resilience, economic resilience, or sustainability” act as drivers to explain the benefits of an operation. According to the vice president, this could require a “longer normal time frame” to adequately assess the damages and benefits derived from a merger. In other words, the analysis could extend beyond the short term to capture structural impacts.
The inclusion of resilience represents a relevant change in the evaluation philosophy. Traditionally, European competition policy has prioritized the maintenance of open and competitive markets, but now the door is opened to also consider the capacity of companies to withstand external shocks.
Dynamic innovation and efficiency
The services of the Directorate-General for Competition of the Community executive “have worked intensely” to define what criteria allow understanding and protecting innovation within merger processes. The new rules aim to foster an “early commitment” between companies and regulators to discuss both the theory of harm and the possible benefits. These benefits include not only direct efficiencies —such as cost reduction— but also so-called “dynamic efficiencies”, related to innovation, long-term investment, and technological development.
This approach responds to the need to prevent an excessively rigid interpretation of competition from ending up slowing down strategic industrial projects for Europe. However, Ribera wanted to send a message of caution. In a press conference on Wednesday to announce the flexibility of state aid due to the crisis caused by the Iran war, she stressed that competition policy cannot solve all the problems of European industry on its own.
In his opinion, many of the difficulties in consolidation are not due to market failures, but to the very fragmentation of the twenty-seven national markets. Therefore, from his cabinet they argue that the response must also involve greater market integration, especially in key sectors.
“Competition is important. Price remains the main point of concern for consumers and businesses,” stated the vice president. For this reason, when a merger reduces competition, companies will have to justify in a “probable and demonstrable” way that the long-term benefits outweigh the potential harm. This principle remains the backbone of merger control: any operation that limits competition must demonstrate that it generates sufficient added value to compensate for that impact.
What's happening with Defense?
One of the most controversial areas during the drafting of the guidelines has been the defense sector. As Ribera acknowledged, during internal consultations, specific questions were raised about the impact of the rules in terms of security, innovation, research, and foreign action.
Resilience as an argument to justify mergers takes on special relevance in these strategic sectors, where autonomy and crisis response capacity are fundamental. In this context, the new guidelines will allow for a more flexible analysis of whether the benefits of a transaction “outweigh the eventual risk of harm” to competition.
According to what Demócrata was able to learn, the drafting process has been marked by a tug-of-war between different ideological currents within the Competition department itself. On the one hand, some officials feared that the emphasis on resilience would end up reducing the number of essential suppliers, forcing customers to resort to riskier alternatives. On the other hand, the need to allow the creation of large European players capable of competing globally was defended. “Our objective is simple: to provide clarity to companies without compromising the competitive market,” Ribera summarized.
Some departments, such as the industrial area led by French commissioner Stéphane Séjourné, pushed for Brussels to facilitate national alliances that could become European champions. From this perspective, merger control should positively recognize those mergers that strengthen the continent's resilience. Its defenders argue that larger companies have greater financial capacity to invest in supply chains and absorb market disruptions. Furthermore, some stakeholders pointed out that vertical mergers can improve security of supply, by allowing companies to better control their critical inputs.
In a global scenario marked by volatility, supporters of this current consider that in sectors such as telecommunications, consolidation is key to guaranteeing investments in cybersecurity and infrastructure robustness. International competition, especially against giants from other regions, has reinforced the idea that Europe needs larger companies to maintain its economic position.
The risks of excessive concentration
However, several competition authorities in the bloc have warned about the risks of prioritizing scale over competition. In their opinion, excessive consolidation can generate systemic risks. If a market depends on one or two dominant operators, a shock affecting those entities could paralyze the entire system. In this regard, some experts warn that, in the pursuit of a more resilient economy, a more fragile economy could end up being built.
The roadmap of European regulation has historically prioritized an open commercial environment, where quality and innovation are the drivers of consumption. This model bets on corporate growth as a way to foster investment, but always under strict surveillance. For regulators, the key lies in controlling business concentrations. The objective is to prevent these operations from generating insurmountable barriers for other competitors. If it is concluded that a merger is detrimental, the Commission can block it or impose mandatory conditions to rebalance the market.
The publication of these guidelines now opens a period of public consultation that will be decisive in defining the final balance between competition and scale. Companies, Member States, and experts will have the opportunity to influence a framework that will shape the future of European industrial policy. At a time when the European Union seeks to strengthen its strategic autonomy without renouncing the principles of the single market, these rules become a key piece.