Introductory remarks
On 30 April 2026, the European Commission (the Commission) published its long-awaited draft updated merger control guidelines (the Draft Guidelines). This represents one of the most significant reforms to the EU merger control framework of the past decades. Once adopted, it will replace the current 2004 Horizontal Merger Guidelines and the 2008 Non-Horizontal Merger Guidelines, by therefore consolidating the Commission’s approach into a single framework.
While the Draft Guidelines introduce several new developments in the assessment of market power, the legal standard for assessing a merger has not changed. The Commission will continue to assess whether a merger would result in a significant impediment to effective competition (SIEC) in the common market or a substantial part thereof. What has changed, however, is how the Commission intends to apply that standard, with a broader and a more forward-looking approach that places increased emphasis on competitive parameters beyond short-term price effects.
The revised framework seeks to align merger assessment with current economic and geo-political realities, where industrial scale and global competitiveness, as well as innovation and investment play a central role, and where sustainability and resilience have become relevant dimensions of competition. In this context, the Draft recognises that transactions enabling firms to expand and achieve scale at a global level may generate procompetitive effects by favouring innovation, investment, resilience, while contributing to sustainable economic growth.
In the sections below, we outline the most significant developments introduced by the Draft Guidelines.
The New Policy Direction: Competitiveness, Resilience and Scale
One of the most prominent policy developments introduced by the Draft Guidelines is the Commission’s express recognition that scale-enhancing mergers can be procompetitive. For the first time, the Commission provides positive guidance on transactions that enable companies to expand their ability to compete both within the internal market and globally, setting out the conditions under which such transactions are likely to be viewed favourably.
Alongside this, the Draft Guidelines place innovation and investment at the centre of the Commission’s broader competitiveness agenda. In that context, the Draft Guidelines explicitly acknowledge that mergers may generate positive effects on non-price parameters of competition such as innovation, sustainability, investment, privacy, and economic resilience. Merging parties are expressly encouraged to articulate these efficiencies and broader pro-competitive effects upfront through a structured “theory of benefit” as part of the merger review process.
The Draft Guidelines further suggest that transactions promoting technological advancements, facilitating investment in critical infrastructure, securing access to key inputs, and/or strengthening the EU’s defence readiness may receive a more favourable assessment, especially where they enhance the global competitiveness of European industries and the claimed benefits outweigh any potential harm to competition. In this context, the Commission explicitly recognises the potential positive role of mergers that support innovation and technological progress, foster market integration and global scale, enhance security and resilience, or contribute to sustainability objectives, especially in sectors requiring substantial and longer-term investments.
Another significant innovation is the introduction of an “Innovation Shield”, aimed at providing greater legal certainty for transactions involving small innovative companies, start-ups or R&D projects that are unlikely to raise substantial competition concerns. The Draft Guidelines indicate that such transactions will generally be viewed as unproblematic where certain structural conditions are satisfied, including the absence of material overlaps in the same market or innovation space, modest combined market shares, and the presence of sufficient independent competitors with comparable competitive capabilities.
Efficiencies: The “Theory of Benefit”
The Draft Guidelines, for the first time, reflect a more receptive approach towards efficiency-based arguments. By recasting efficiencies as a “theory of benefit”, a structured, affirmative case for clearance that mirrors the rigour applied to theories of harm, the Commission is placing procompetitive arguments on equal analytical footing with competition concerns. Merging parties are expected to present how the merger-specific synergies arise and how they are expected to support or preserve effective competition in the market.
The Draft Guidelines also draw a clear distinction between “direct efficiencies” stemming from the integration or consolidation of the parties’ activities (including economies of scale and scope) and “dynamic efficiencies”, which encompass the enhanced capacity or increased incentives of merging firms to invest, innovate, develop improved products and services, or enhance other pro-competitive dimensions of competition.
New and Expanded Theories of Harm
One of the most forward-looking elements of the Draft Guidelines is the introduction of a comprehensive framework for assessing dynamic competitive harm addressing mergers’ impact on innovation, investment incentives and the competitive potential of future market participants.
The Draft Guidelines articulate three distinct, closely related theories of harm relevant to dynamic and innovation-driven markets:
- Loss of innovation competition: A merger may impede the innovation competition process by eliminating competition between the merging firms and by weakening the merged entity’s incentives to invest in the development of new or improved products and services.
- Loss of investment and expansion competition: A merger may harm competition by leading to discontinuation, downsizing, delay or redirection of investment projects.
- Loss of potential competition: A longstanding theory, now significantly expanded, covering transactions involving firms that currently constrain, or are likely in the foreseeable future to constrain, the competitive behaviour of incumbents.
Alongside these three dynamic theories, the Draft Guidelines introduce a dedicated framework for assessing the entrenchment of a dominant position, particularly relevant in ecosystem markets of products and services.
Furthermore, the Draft Guidelines articulate a number of theories of harm that extend the Commission’s traditional enforcement practice into areas previously addressed only at the margins.
- On labour markets, the Commission makes clear that a merger between employers may give rise to a significant impediment to effective competition where it creates or strengthens monopsony or oligopsony power, potentially resulting in lower wages, or worse working conditions, including lower worker mobility, and may reduce incentives for workers to enter a given labour market, with downstream customers also capable of being harmed through higher prices or lower quality or choices where the exercise of that power affects supply conditions.
- On minority shareholdings and common ownership, the Draft Guidelines recognize that where the merging firms and their rivals are minority-owned by the same legal or individual persons (e.g., institutional investors), this may lessen the incentives to compete among these firms. Additionally, where common ownership is present, market share and concentration measures tend to underestimate the expected competitive effects of the merger and may be adjusted accordingly.
- On foreclosure, the Draft Guidelines adopt a broader and more dynamic understanding of the circumstances in which vertical and complementary market structures may generate anticompetitive harm. Foreclosure need not eliminate rivals entirely in order to give rise to such harm. ; rather, the Commission may equally find that partial foreclosure is sufficient to significantly harm competition. Perhaps most notably, the Draft Guidelines give explicit recognition to dynamic foreclosure incentives. The Commission may find that the merged entity has an incentive to engage in foreclosure strategies not to capture immediate gains, but to strengthen, entrench or extend its market power over time, progressively undermining rivals’ ability to compete effectively, deterring entry or expansion, and diminishing rivals’ incentives to invest and innovate.
Concluding remarks
The Draft Guidelines signal a material evolution in EU merger control policy and are likely to affect how businesses approach transaction planning, risk assessment and engagement with the Commission going forward. In particular:
- Internal documents and strategic rationale will carry even greater weight. The Draft Guidelines confirm the Commission’s broad reliance on qualitative evidence, including business plans, investment strategies, board materials and internal communications, when assessing both theories of harm and claimed efficiencies.
- Parties will need to proactively articulate a “theory of benefit”. Transactions are likely to require a more developed evidentiary narrative demonstrating how the merger contributes to innovation, investment, resilience, sustainability or other procompetitive outcomes, and the parties shall be able to demonstrate these arguments early on in the process.
- Innovation and future competitive potential will face closer scrutiny. Acquisitions involving emerging technologies may increasingly be assessed through the lens of potential competition and dynamic theories of harm, even where current overlaps appear limited.
- Labour market considerations are becoming part of merger review. Transactions involving significant overlaps in hiring markets or specialised labour pools may now face additional scrutiny relating to wages, mobility and employment conditions.
- The Guidelines may create opportunities for scale-enhancing and investment-driven transactions. The Commission’s explicit recognition of competitiveness, resilience and innovation-related efficiencies may provide greater scope for parties to defend strategically important transactions, particularly in sectors requiring substantial long-term investment.
While the Draft Guidelines aim to modernize and increase the predictability of EU merger control, they also suggest a more expansive and economically nuanced enforcement framework. The extent and practical impact of these changes will depend not only on how the Commission applies the new principles in future decisional practice, but also to the extent to which the proposals contained in the Draft Guidelines are ultimately reflected in the final version of the Guidelines, currently expected by the end of 2026.
