EU looks to revamp merger rules to remain globally competitive

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The proposed changes aim at promoting European innovation and competitiveness on the global stage

This week, the European Commission has launched a public consultation on the bloc’s longstanding merger rules, which it is hoped will encourage investment and innovation.

The review relates to the horizontal merger guidelines (HMG), which governs mergers between actual or potential competitors in the same market, as well as those that operate at different levels of the supply chain.

Seven key topics were listed as a focus of the review: competitiveness and resilience, market power, innovation, decarbonisation, digitalisation, efficiencies, defence and labour considerations.

“This is a pivotal moment for Europe, and it is only by evolving that we can ensure that our merger control policy continues to serve people, drive innovation, and strengthen Europe’s resilience and leadership,” said Teresa Ribera, executive vice president for Clean, Just and Competitive Transition. “We count on your help. We stand ready to hear the views of consumers and businesses all across Europe on how our merger review framework can be made fit for the future.”

The EU’s existing merger rules were drafted in 2004 and have received numerous updates since that time. From a telecoms perspective, these rules have long been viewed as overly restrictive, blocking consolidation in highly competitive markets. This, the operators argue, has limited their ability to invest at scale and is hindering their international competitiveness.

The national antitrust regulators, however, argue that shrinking the number of players in individual markets risks reducing competition, driving up prices for consumers, and decreasing incentive to invest in infrastructure. Regulators from Austria, Belgium, the Czech Republic, Ireland, the Netherlands, and Portugal notably issued a joint statement to this effect last month.

“The narrative that fragmentation in the electronic communications sector, hindering investment and innovation, allegedly results from unduly strict competition rules is misplaced,” read the statement.

This long-running debate has been thrown into sharp relief in recent years due to global economic instability, particularly the geopolitical clash between the USA and China which has left Europe scrambling to attain technological growth and self-sufficiency.

Following her re-election in July last year, President of the European Commission, Ursula von der Leyen, wrote a letter to Ribera, outlining the need for “new approach to competition policy” to boost innovation.

The letter asked Ribera to “modernize the EU’s competition policy to ensure it supports European companies to innovate, compete and lead world-wide and contributes to our wider objectives on competitiveness and sustainability, social fairness and security.”

More specifically, it said that revisions to the HMG should “give adequate weight to the European economy’s more acute needs in respect of resilience, efficiency and innovation, the time horizons and investment intensity of competition in certain strategic sectors and the changed defense and security environment.”

These same factors were again highlighted in the newly announced review.

“This comprehensive and ambitious review of the EU merger guidelines is a unique opportunity to modernise the Commission’s framework for assessing the impact of mergers on competition. It will allow us to account for disruptive changes in our societies and our economies over the past 20 years, such as digitalisation, and enable us to ensure that innovation, resilience, and the investment intensity of competition are given adequate weight in light of the European economy’s acute needs,” said Ribera in a statement.

Interested parties have until 3 September to submit their response to the consultation.

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Author: Ernestro Casas -

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