Antitrust

The European Commission has published its long-awaited updated Merger Guidelines, marking the most significant revision of the EU’s merger control framework in over two decades.  The new guidelines attempt to thread a difficult needle: responding to political pressure for European champions, competitiveness and resilience amid geopolitical shifts, while maintaining competitive safeguards through modernized analytical tools that preserve legal certainty.  Crucially for dealmakers, the updated framework creates new opportunities to frame pro-competitive narratives for transactions, centred around scale, innovation and resilience, while at the same time introducing potential new areas of scrutiny. 

While the draft Merger Guidelines will now be open for consultation until 26 June 2026, any changes before the guidelines are finalized (by Q4 2026) are expected to be limited and the EC can be expected to begin reflecting the revised guidance in its decisional practice immediately.  We explore the key aspects below. 

Background

On April 30, 2026, the European Commission (“EC”) published a draft of its revised Merger Guidelines (the “Guidelines”) for consultation, following a comprehensive review process that began in May 2025.  The updated guidance will replace both the 2004 Horizontal Merger Guidelines (covering mergers between competitors) and the 2008 Non-Horizontal Merger Guidelines (covering vertical and conglomerate mergers), consolidating them into a single integrated analytical framework applicable to all types of mergers.

This is not a routine refresh.  The revision reflects over 20 years of decisional practice by the EC and European Courts, and a fundamentally changed economic and geopolitical landscape shaped by digitalisation, platform economics, AI, supply chain fragility and the EU’s renewed focus on industrial competitiveness following the 2024 Draghi Report on the future of European competitiveness.  The update comes against the backdrop of mounting political pressure on the EC to allow European firms to achieve greater scale to compete with global rivals in key sectors.  

The revised Guidelines were shaped by an extensive public consultation, with almost 200 respondents.  Consultation responses reflected a tension between enabling European scale and global competitiveness – including through consolidation that supports investment and innovation – while preserving robust consumer protection.  Respondents also pressed for a more workable approach to efficiencies claims, which the EC has rarely accepted in practice.  Finally, there was broad support for a more dynamic assessment of mergers that better captures innovation, investment and other longer-term effects.

What’s new: key substantive changes

In the press release accompanying the Guidelines, EC President Ursula von der Leyen states that they are intended to “better support companies to thrive, scale and innovate…while preserving the predictability and certainty that investors value most”.  To this end, the Guidelines signal a material shift in how the EC assesses mergers, which – depending on how they are applied in practice – could change the regulatory prospects for certain deals.  

By combining the previous Horizontal and Non-Horizontal Merger Guidelines into a single document, the Guidelines move away from the EC’s current approach of analysing anti-competitive effects differently according to merger type.  Instead, a broader range of theories of harm will in principle be in play for all mergers, giving the EC increased flexibility in how it evaluates and presents concerns.  This includes in relation to vertical and conglomerate mergers, with the formalistic framework currently set out in the Non-Horizontal Guidelines replaced by a more holistic approach centred around foreclosure risks.

The Guidelines also create important opportunities for merging parties and potential new paths to clearance.  We discuss the key changes below. 

Industrial policy and pro-competitive rationales to the fore

The Guidelines place increased emphasis on the importance of EU merger control in supporting broader EU policy objectives, including the “competitiveness and resilience of the internal market” and “greater productivity, investment and innovation”.  The document also references supply chain diversification, critical technologies, defence readiness and sustainability at various junctures. 

Significantly, the EC states that the “approach to balancing different possible effects of a merger needs to be re-examined”, as scale and global competitiveness have become increasingly important, and in light of changes in the geopolitical and trade climate.  The Guidelines therefore require the EC to give due weight to scale, innovation, investment and resilience as pro-competitive factors that “can benefit from a degree of consolidation”. 

Theory of benefit and efficiencies

Reflecting this shift, a key change is the new concept of a ‘theory of benefit’, which merging parties are encouraged to bring forward where they consider a merger gives rise to efficiencies that may offset any harm to consumers. 

While the analytical framework for assessing efficiencies is essentially unchanged, the Guidelines indicate an increased willingness by the EC to engage with efficiencies claims and to weigh positive and negative effects.  The Guidelines formally adopt a taxonomy distinguishing ‘direct’ synergies (cost savings, economies of scale and scope, pass-through to consumers) from ‘dynamic’ synergies (innovation benefits, investment uplift, sustainability improvements and resilience gains) and importantly clarify that the EC will apply the same evidentiary standard to efficiency claims as to theories of harm.  The EC encourages early engagement on efficiencies during the review process, including during pre-notification.

While it remains to be seen what difference these changes will make in practice, the message is clear: the EC is now more open to considering the positive impacts of mergers and will not merely treat efficiencies as a box-ticking exercise late in the review.  That said, the Guidelines are also explicit that the more serious and certain the competitive harm, the heavier the burden on parties to demonstrate countervailing benefits.

Benefits of scale balanced against market power concerns

For dealmakers, the changes present new opportunities for framing the pro-competitive rationale of a transaction, particularly in sectors where European scale is critical to global competitiveness.  The acknowledgement that scale may boost competitiveness is particularly welcome, with the Guidelines setting out a list of scenarios in which scale-enhancing mergers can be expected to benefit consumers.  This includes combining complementary capabilities, enabling R&D synergies, accelerating access to talent or critical resources and enabling European companies to compete in markets characterised by large global incumbents. 

At the same time, the EC cautions that the benefits of scale must be distinguished from increased market power that would harm consumers.  The Guidelines contain an expanded list of eight standalone theories of harm that apply to all types of mergers, several of which are inherently more likely to be engaged by scale-enhancing mergers: (a) loss of head-to-head competition, (b) loss of investment and expansion competition, (c) loss of innovation competition, (d) loss of potential competition, (e) foreclosure, (f) entrenchment of a dominant position, (g) coordination, and (h) other effects including portfolio effects, access to commercially sensitive information and, for the first time, labour market effects, formally recognising monopsony concerns where a merger concentrates employer market power. 

The Guidelines leave the EC with a wide margin discretion, with the balancing of the different possible effects of scale-enhancing mergers to be conducted on a case-by-case basis.  Pro-actively developing a pro-competitive narrative and evidence base will be key. 

Entrenching the EC’s position on ecosystems

Of particular note is the establishment of ‘entrenchment’ as a potentially standalone theory of harm, building on the EC’s decision in Booking.com/eTraveli.  The theory addresses mergers where a firm gains control over assets that structurally create or reinforce barriers to entry and expansion.  The key difference to vertical/conglomerate theories of harm is that, according to the Guidelines, when advancing an entrenchment theory the EC does not need to show foreclosure.  

Given that the Guidelines recognize that acquiring complementary capabilities can drive progress, it remains unclear where the EC will draw the line between pro-competitive scaling and anti-competitive ‘entrenchment’, although importantly an entrenchment theory will require dominance in one or more closely related markets.

The introduction of this theory closely mirrors the approach adopted by the United States in the 2023 Merger Guidelines, under which the US agencies will similarly assess whether a merger reinforces a dominant firm’s position by raising barriers to entry, eliminating a potential rival, or enabling expansion of dominance into adjacent markets.  Parties acting on cross-border transactions should bear in mind this convergence.

Notably, the entrenchment theory under the Guidelines is in principle applicable in all sectors, i.e. beyond digital ecosystems.  Given that the Booking.com/eTraveli decision is currently subject to an appeal to the General Court, with a judgment expected in the coming months, this may be an effort by the EC to protect the theory of harm in case the General Court rules against it. 

Innovation and dynamic competition

The Guidelines introduce a structured distinction between “direct” and “dynamic” effects, recognizing that a merger’s impact on investment and innovation rivalry may be at least as consequential as its immediate price effects.

On the pro-competitive side, the Guidelines set out a framework of “dynamic synergies”, including innovation enabled by scale, spreading technology across a wider customer base, easing financial constraints on R&D-intensive targets, and reallocating scarce research resources.  It is acknowledged that disruptive innovation often requires large, sustained investment with uncertain returns, and that mergers may sometimes be the only route to the necessary scale.  The time horizon for dynamic efficiencies has also been extended to reflect longer innovation cycles, and the EC will consider dynamic counterfactuals (including likely entry, expansion or technological change) where these can be predicted with sufficient certainty.

On the flip-side, the Guidelines codify the EC’s expansive approach to innovation harm, building on precedents such as Dow/DuPont and Pfizer/Seagen.  Under this theory, the EC can challenge a merger that removes head-to-head innovation rivalry, even where the parties do not currently compete on price, including where one party’s pipeline is seen as critical to maintaining competitive dynamics.  Dynamic considerations will also feed into the assessment of other theories of harm, including foreclosure of innovation-heavy rivals and loss of investment competition.

Acquisitions of start-ups to benefit from ‘innovation shield’

Counterbalancing the expanded theories of harm, the Guidelines introduce an ‘innovation shield’ – a form of safe harbour for acquisitions of small innovative companies, including start-ups.  The EC states that, in principle, such acquisitions are unlikely to give rise to competition concerns where defined conditions are met, including thresholds relating to market shares, the number of remaining competitors with comparable R&D projects, and the absence of overlaps in the same relevant market or innovation space.

However, the shield comes with an important limitation: it does not apply where the acquirer is a designated gatekeeper under the Digital Markets Act in relation to products or services included in the relevant market.  This carve-out means that the largest digital platforms cannot benefit from the shield when acquiring innovative targets in markets connected to their gatekeeper activities.  For other acquirers of small targets, the innovation shield may offer a welcome degree of predictability, although important questions remain around how the EC will identify what constitutes a “small innovative company” and how the conditions will be applied in practice.

Practical takeaways

Many of the detailed provisions in the Guidelines closely align with the EC’s enforcement practice in recent years, which has evolved significantly since the prior guidance was published.  By codifying and setting that practice out more clearly, the revised Guidelines should assist dealmakers and practitioners in stress-testing plausible theories of harm, planning the evidence needed to address them, and considering remedy feasibility. 

Parties pursuing structural consolidation in a segment where they are rivals should expect traditional theories of harm to be the starting point, even under the new framework.  But at the same time, the Guidelines create new opportunities to build pro-competitive narratives around scale, innovation, supply chain resilience and global competitiveness. 

Critically, the Guidelines leave the EC considerable discretion as to how to factor pro-competitive arguments into merger reviews, and how to balance wider policy considerations against competition concerns.  The risk is that the EC’s enhanced flexibility cuts both ways: it may support clearance arguments for transactions that genuinely enhance European competitiveness, but it could equally be invoked to justify intervention (or non-intervention) on novel and unpredictable grounds.  Dealmakers should welcome the direction of travel but will need to watch early enforcement action closely to understand where the EC draws the line between flexibility and predictability.

What is clear is that, to be credible, any pro-competitive rationale or “theory of benefit” must be articulated from the outset and woven into the transaction narrative from the earliest stages of engagement with the EC.  This means ensuring that deal documents and internal analyses consistently reflect the claimed benefits.  Moreover, despite the EC being more willing to lend an ear, the evidential burden to establish efficiencies claims remains high: parties should be prepared to submit robust economic analysis demonstrating that the claimed benefits are merger-specific, verifiable and likely to be passed on to consumers.  

Finally, third-party engagement appears set to become even more significant under the revised guidance.  The EC’s attention to resilience, sustainability and labour market effects means a broader universe of stakeholders are likely to be surveyed.  Parties should be prepared for increased market outreach and remain ready to address a wider range of concerns.

Next steps and implementation

The draft Guidelines will be open for public consultation until 26 June 2026, before being finalized in Q4 2026.   However, EVP Ribera has already indicated that any changes following stakeholder feedback are likely to be modest, and the EC can be expected to begin reflecting the revised guidance in its decisional practice immediately.  How this plays out in early cases through 2026–2027 will be crucial to establishing whether the EC can modernize merger control without sacrificing predictability and legal certainty.