Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The EU is planning the biggest relaxation of its rules on corporate mergers in decades as Europe faces increasing pressure to build global champions capable of taking on US and Chinese rivals.
The European Commission will give greater weight to “innovation, investment and resilience of the internal market”, when deciding whether to sign off on deals, according to draft guidelines seen by the FT.
The proposed change would mark the most radical shake-up by Brussels since the 2000s, when competition regulators put the effect of mergers on consumers at the heart of their decisions.
The new merger guidelines, which are still subject to change, would broaden the terms on which Brussels weighs whether a merger is acceptable. The reforms have been highly anticipated by dealmakers and investors looking at potential future consolidation.
If adopted by the Commission, the new policy approach would reflect a broader change in the political mood across the continent, with calls to enable more “European champions” to take on corporate giants in the US and China.
“The guidelines are a break from the past,” an EU official said, calling them “an ambitious approach that reflects the realities of increasingly challenging global competition”. The official added that the guidelines reflect “the priorities of this Commission mandate — ambition and scale”.
To increase competitiveness, European Commission president Ursula von der Leyen has championed a “new approach” on competition that is “more supportive of companies scaling up in global markets”.
But it has faced resistance from some liberal member states and parts of the Commission, which fear that relaxing constraints on mergers would hurt innovation, damp investment and force consumers to pay more for goods and services.
The draft guidelines maintain the core objective of preserving effective competition. But they note that “the growth and scaling-up of firms . . . so as to reach the necessary size to compete globally, can be pro-competitive”, arguing this can have a “positive impact” on the EU.
Noting a changed geopolitical context, the document argues the economy has also “shifted towards more innovation-heavy sectors where both scale and innovation are critical to compete”.
It calls on the EU’s antitrust division to pay closer attention to the impact of mergers on “scale, innovation, investment and resilience as pro-competitive factors that can benefit from a degree of consolidation”.
While these factors were taken into consideration when investigating European mergers, companies have long complained that such arguments were always secondary to assessments of pricing power.
The draft guidelines argue that innovation and scale ultimately benefit consumers, for example by securing access to critical inputs and strengthening the resilience of supply chains.
The European Commission declined to comment.
