April 20, 2026, 16:21 GMT | Insight
Corporate deals that drive technological progress, boost R&D and secure access to critical inputs may get an easier path to EU approval, according to draft guidelines seen by MLex. The
European Commission’s new policy document signals openness to a transaction’s positive impact on economic resilience and investment, but notes that this will be balanced against any harm to business and consumers.
Corporate deals that drive technological progress, boost R&D and secure access to critical inputs may get an easier path to EU approval, according to draft guidelines seen by MLex.
The European Commission’s new policy document signals openness to a transaction’s positive impact on economic resilience and investment, but notes this will be balanced against any harm to business and consumers.
The guidelines are seen as a key bellwether on how the bloc can help companies build scale and compete with rivals in China and the US.
They point dealmakers to the kinds of tieups that might make a positive contribution to Europe’s competitiveness, such as by enabling the bloc to compete in global markets where they face pressure from a smaller number of global players.
Defense-sector deals and transactions that combine different businesses to enable them to invest in “critical infrastructure” or access “critical inputs” also get a positive mention in the text.
The document, which runs to around 100 pages, invites companies wishing to trumpet the upside of their deals to formulate a “theory of benefit” and bring those arguments early in the process — even before EU officials start to suspect that a deal might lead to harm.
Such benefits could be to economic resilience, sustainability “or scale effects that will reduce unit costs or facilitate the financing of necessary investments,” the draft reads. But the more certain and imminent the probable harm from a deal, the more companies will have to prove their benefits outweigh that impact, the commission says.
“It is highly unlikely that a merger leading to a market position approaching that of a monopoly or a similar degree of market power, will result in efficiencies that will sufficiently outweigh the harm caused by the merger,” it reads.
Teresa Ribera, Executive Vice-President for a Clean, Just and Competitive Transition, is holding the pen on the policy document, which gives guidance on how certain transactions will be seen when they undergo formal review.
Debate on the guidelines has seen business groups and some governments call on the commission to look more positively on industry consolidation, saying it is needed to strengthen Europe in the face of global competition.
Others have warned that consolidation shouldn’t be to the detriment of consumers who might face higher prices. Furthermore, some industries such as telecoms are carved up along national borders and so need a narrower review.
— Deal benefits —
The draft devotes 15-odd pages to discussing how companies can explain the benefits — or “efficiencies” — of their transactions. Dealmakers see this as the key avenue for how to persuade officials to approve mergers that would currently be rejected.
The text says that efficiencies may reflect the “objectives of EU policies” or address market failures like wrongly priced “negative environmental externalities” or “security of supply” risks.
“The commission enjoys a margin of discretion in weighing demonstrated efficiencies in the balance, against harm to businesses and consumers,” it says, noting that investigators retain significant freedom in how they assess such claims.
The benefits must accrue to “substantially” the same consumers likely to be harmed by the merger. For example, a company can’t offset harm to one side of a multi-sided market with benefits to another side, if the consumers are different.
The guidelines also evoke the possibility of “collective benefits” for a wider group that includes the harmed consumers.
As for balancing harm versus benefits, the draft says immediacy can play an important role with more weight being given to changes that will occur in the short-term.
“The greater, the more certain and immediate the harm to competition, the larger and more likely the benefits expected to materialize in the future should be to offset the harm.”
— Dynamic —
The commission has faced calls to advance its analysis beyond an alleged “static” view of market competition and look more at “dynamic effects.” Such a view is said to be better suited to how markets really function, with swift changes and multi-faceted rivalry.
Traditionally, market shares have been a solid metric of a company’s power, but the draft guidelines note that such a measuring stick may not always reflect a company’s power. For example, a company may be an “important competitive force,” even though its size would suggest otherwise.
The commission notes that it usually considers a two-year timeframe to assess whether a newcomer is likely to enter the market and introduce competition. But the draft says that some markets may need a longer time horizon “where entry requires upfront investments.”
— Tech sector —
During drafting of the new guidelines, Ribera championed one novelty planned for inclusion, namely an “innovation shield” that would guard M&A activity involving certain kinds of startups from review.
The text notes this shield could apply for transactions where the companies have limited overlaps in their R&D activities below certain market thresholds.
The commission also sheds light on how it views instances where large dominant companies acquire smaller ones and “entrench” their market position or “ecosystem.”
“Entrenchment is more likely in the presence of market dynamics that reinforce or protect the merging firm’s position such as network effects, scale economies or customer inertia,” it reads.
The text remains under discussion. A final draft of the guidelines will be published for consultation in the coming weeks.
Please email editors@mlex.com to contact the editorial staff regarding this story, or to submit the names of lawyers and advisers.
Tags
Sections:
Mergers & Acquisitions, DealRisk®
Industries:
Agriculture, Forestry, Fishing & Hunting, Automotive, Banking & Finance, Chemicals, Construction, Consumer Products, Computing & Information Technology, Defense & Aerospace, Educational Services, Energy & Utilities, Entertainment & Arts, Environmental Industry, Health Care, Insurance, Manufacturing, Mining & Extraction, Marketing & Advertising, Media & Telecommunications, Pharmaceuticals & Biotechnology, Professional Services, Real Estate, Retail & Wholesale Trade, Transportation & Warehousing, Travel, Hospitality & Tourism, Waste Management & Remediation Services
Geographies:
Europe, European Union Member States