The European Commission has published draft merger guidelines, which will replace the 2004 Horizontal Merger Guidelines and the 2008 Non-Horizontal Merger Guidelines when finalized. The draft guidelines aim to strike a balance between allowing the emergence of “European champions” to compete on a global scale and maintaining a predictable and principle-based approach to merger assessment.
The draft guidelines consolidate, update, and modernize the Commission’s approach to merger assessment, giving the Commission sufficient discretion to decide on a case-by-case basis. At the time of writing, the draft had just been published for consultation, with the final version expected before the end of 2026.
The key themes in the draft guidelines include an expanded catalogue of theories of harm, the approach to assessing “dynamic competition”, the new approach to balancing harm with benefit, the “innovation shield”, and the express discussion of mergers for scale. Recent cases have developed new and evolving theories of harm, such as access to commercially sensitive data, minority shareholdings between competitors, and portfolio effects.
The draft guidelines codify these theories, including a new theory of harm for labour markets, where companies are considered buyers and workers are considered sellers of labour. They will assess whether a merger increases purchasing power in labour markets, harming wages or conditions, particularly where workers have few alternative employers.
The Commission will also assess “diagonal” mergers where there is no vertical relationship, and update foreclosure strategies for the digital world, including data, interoperability, and post-sale quality of service restrictions. Dynamic assessment is also emphasized, looking beyond current market conditions and static indicators of competition to forward-looking capabilities and incentives to compete.
This is particularly important in R&D-driven sectors, including tech and pharma, and sectors undergoing the green transition or digitalization. The draft guidelines reflect the direction of travel of recent cases.
The draft guidelines identify types of mergers likely to be beneficial, including mergers combining complementary products to create new solutions at lower prices.
Mergers enabling scale to reduce costs and compete on innovation and investment, and mergers promoting internal market integration through cross-border expansion, are also considered beneficial. To clear the merger, the benefits need to at least offset the identified harm to competition on a lasting basis.
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The draft guidelines give the Commission a margin of discretion, with a sliding scale applying: the greater and more immediate the harm, the more certain and substantial the benefits must be. They introduce an “innovation shield” to clarify when acquisitions of small innovative firms are unlikely to raise concerns.
This establishes an “in principle” finding that there are no competition concerns for deals meeting certain conditions based on market shares, size, and the presence of sufficient alternatives in the relevant market. The innovation shield framework may also frame Member States’ use of call-in powers, which is a welcome step in the direction of deal certainty.
However, it remains to be seen whether the innovation shield will have wide practical application, as the requirements are demanding and the Commission retains broad discretion. The draft guidelines emphasize how mergers can increase EU firms’ scale, competitiveness, and resilience, signaling a potential willingness to allow “mergers for scale” that might have been challenged in the past.
Scale can be beneficial, particularly in global industries with high capital intensity and rapid innovation through R&D, such as when considering real estate mergers. The draft guidelines identify various ways in which scale can be positive for the competitiveness of the EU, including driving innovation and technological progress, enabling EU market integration and expansion, and boosting security and resilience.
However, the draft guidelines also draw a clear line between pro-competitive scale and market power. Scale benefits must flow through to consumers, and a merger that increases market power in a way that harms EU businesses and consumers will not be treated as positive, however strong the scale rationale.
The draft guidelines represent a considered update of twenty-year-old guidance, reflecting case practice over the last two decades and the application of theories of harm to digital markets and innovation-based competition. The fundamental legal principles underpinning EU merger control remain intact, but the emphasis has shifted, with efficiencies now sitting alongside theories of harm in a single, integrated assessment.
Deals that raise competition concerns will still face close scrutiny, but the door is now open to weigh a transaction’s benefits alongside its adverse effects. This will require parties to consider the range of benefits that a deal brings and to gather supporting evidence well in advance of signing deals so that robust arguments can be deployed in discussions with the Commission from the outset.
Parties should be prepared to provide evidence of the benefits of a deal, including any potential bankruptcy implications.