Europe’s leaders have spent two years demanding a competition rulebook that would finally allow homegrown industrial giants to emerge. Now they got one, but it doesn’t do what they asked for.
The European Commission published its draft of the revised EU merger guidelines. The first revision in over 20 years is a result of a push to allow European industry to compete at scale with its American and Chinese competitors.
“Europe needs bold, innovative companies that can compete on the global stage. We have the talent. Now we must build the environment for Europe’s next champions,” said European Commission president Ursula von der Leyen.
But building champions is not what the text prescribes, nor how her colleagues view the draft.
You might be interested
A Commission divided
Teresa Ribera, the Executive Vice-President responsible for the guidelines, was careful on Thursday to distance herself from the champions framing her boss had enthusiastically embraced. “The founding purpose remains unchanged,” she said in a statement. “Protecting strong, competitive markets without allowing an accumulation of power that can be abused.”
Ribera has long argued that the guidelines were not the right tool for the problem European industry actually faces. The real obstacle to European champions, she asserts, is not merger rules but the fragmentation of the single market itself.
The tension between the two on the goal of the product has worked its way into the process, and reflects the compromise of the draft itself. When Von der Leyen called for the guidelines to be accelerated by a year last September, Ribera responded within hours, warning against giving in to “vested interests”.
What’s in the text
The guidelines represent the most significant rewrite of the EU’s merger rulebook since 2004. It replaces two separate sets of rules — one covering mergers between competitors, the other mergers between companies at different points in a supply chain.
But the fundamental question regulators must answer remains unchanged: would this merger significantly damage competition? The bar of evidence required to answer it remains unchanged too.
Europe needs bold, innovative companies that can compete on the global stage. We have the talent. Now we must build the environment for Europe’s next champions.
— Ursula von der Leyen, President of the European Commission
What has shifted is the framework around that question. It gives companies more room to argue that their deal is good for investment and industrial scale. At the same time, the Commission now has new tools to challenge mergers it considers harmful. It is a rebalancing, not a transformation.
Defence is competition
Perhaps the most significant shift from the draft is on geopolitics and defence. For the first time, supply chain resilience and defence readiness are formally embedded in the competitive assessment itself. The Commission can use both to block a merger it considers harmful to European security and to credit efficiency arguments made by merging companies.
Equally significant is what the guidelines do to rein in national governments. Until now, member states have increasingly used security and strategic interest arguments to block or impose conditions on major mergers. Even ones the Commission had already approved or was reviewing. The new guidelines set strict limits on when and how governments can do this. It includes a hard deadline of 25 working days for national interventions to be assessed, and explicit grounds on which Brussels can overrule them.
The goalposts have moved
The guidelines also change when companies can argue their deal is good for the economy. Previously, efficiency arguments were a last resort raised after regulators had already found a problem. Now companies are expected to make that case from the very start of the review process.
The guidelines also contain two additions that cut directly against the pro-consolidation framing. The first concerns workers. When two large employers in the same sector merge, the Commission can now assess whether the deal reduces workers’ employment options or pushes down their wages. That assessment has nothing to do with consumer prices or market competition in the traditional sense.
Second, mergers that result in competing companies relying on the same AI-powered pricing software can now be flagged as a competition problem. This is because the shared algorithms can allow rivals to coordinate prices without ever speaking to each other.
The document being sold politically as a loosening of merger control has quietly handed regulators significant new powers in areas nobody was expecting.
A debate ahead
Not everyone is convinced. Finland, Ireland, the Czech Republic, Estonia and Latvia submitted a joint document ahead of publication opposing any loosening of the rules. They argue that “size in itself should not be the primary objective”. Their formal response to the published text is still outstanding — and will be the first real indicator of how contentious the consultation process ahead is likely to become.
The draft is now open for public consultation until June 26, with a stakeholder workshop scheduled for June 10. The Commission is targeting final adoption by the end of 2026.
