Change is the core theme of the European Union’s draft Merger Guidelines, which seek to embed flexibility into merger assessment to account for the dynamic interactions between firms, markets, and different policy areas and take seriously innovation and long-term effects. The European Commission does not abandon the structural and “more economic approach” to merger enforcement, but rather gives it a dynamic twist. The opening up of substantive review has many benefits but also brings increased business uncertainty and administrative discretion, writes Anna Tzanaki.
This article is part of a symposium on the European Commission’s draft Guidelines on the assessment of mergers under Council Regulation. The new merger guidelines mark their first systemic update since their first release in two parts in 2004 and 2008. You can read the rest of the contributions to the symposium as we publish them here. We encourage responses to our symposium, which can be submitted to promarket@chicagobooth.edu.
The European Commission delivered on its promise. In what is considered record time for European Union competition policy circles, the Commission published on April 30, 2026, its new draft EU Merger Guidelines, which are now subject to public consultation. The draft introduces significant changes, from the analytical to the philosophical and symbolic, as much as it codifies case practice. To the credit of its drafters, it transpires as a document that is both traditional and progressive, with something to please everyone. Similar to the 2023 United States Merger Guidelines, the EU draft Guidelines combine the 2004 Horizontal and the 2008 Non-Horizontal Merger Guidelines into a single document, providing a unified framework and set of principles for the substantive analysis of all kinds of mergers. This structural novelty has implications for the substance of the new guidance, including collapsing thresholds for some theories of harm and indicators of market power.
But the most striking difference to the past is the draft Guidelines’ expansive vision reframing the role, objectives, and scope of EU merger control. To achieve this complex mission, the draft Guidelines take a calculated dynamic and pragmatic turn to conventional analytical approaches: more parameters to consider, a longer time frame for the analysis, a richer and broader range of theories of harm, efficiencies and scale benefits brought to the fore, and a consideration of geopolitical context. Like Schrödinger’s cat, the draft is full of possibilities, fewer certainties and open to interpretation until tested in actual cases. So, what to make of the “new normal” in EU merger control, and is it as radical or as promising as one imagines? Or are there potential risks accompanying the Commission’s novel approach?
A shifting political economy of EU merger control
EU merger policy has become unapologetically strategic. Right up front, the draft Guidelines highlight the importance of merger control for the internal market and EU competitiveness and growth. Innovation, scale and resilience are elevated to key parameters to which the substantive merger review framework needs to pay attention and lend adequate weight. Given these broader policy objectives and the changing global geopolitical landscape, EU merger control is not only expected to prevent excessive market power that undermines the competitive process and harms consumers, but also to facilitate procompetitive scaling, innovation, and investment. Perhaps a lot of this was reflected in pre-existing practice (e.g. drawing on the Commission’s experience with innovation-centric merger cases) and mindsets (see, for example, the Draghi Report on EU competitiveness). Yet, even so, the fact that this is made explicit and the official view on the role of merger control in the EU is significant.
But the genius of the reformers is that this subtle broadening and reordering of objectives in the Guidelines is firmly tied to the consumer welfare standard. For instance, merger efficiencies must deliver benefits to consumers, even if indirect, to counteract any anticompetitive harm. By tying the new to the old, the draft therefore aims to promote evolution in a responsible and bounded way that dispels the specter of industrial policy infiltrating merger control and distorting its objective application.
Structure still matters but with some twists
The starting point of the analysis remains structural in nature. But there are notable novelties here, too. On the one hand, traditional structural indicators of market power are fleshed out in the draft Guidelines, but their thresholds have been amended and their probative value has become more relative as one factor among many in the substantive assessment. This is in contrast to the U.S. Merger Guidelines, which establish a “structural presumption” of illegality based on market shares and concentration levels.
For instance, the soft safe harbor for vertical or conglomerate mergers of below 30% market shares has vanished and is replaced by a uniform 25% market share threshold for all mergers, below which a finding of a “significant impediment to effective competition” (SIEC) is unlikely. Perhaps this is partly a side effect of the merging of the two pre-existing sets of Horizontal and Non-Horizontal Merger Guidelines into one. Or it is a sacrifice made to open up merger enforcement to a more dynamic approach. To this effect, the draft brings out compensating features, such as the newly introduced “innovation shield.” This so-to-speak innovation safe harbor for acquisitions involving small start-ups also relies on a matrix of various structural factors, such as market shares, the number of remaining competitors independent of the merging parties, or the acquirer’s position status as a non-market leader or gatekeeper.
It is characteristic of the draft Guidelines that this and the relevant thresholds for other indicators are now concretely discussed in quantifiable terms under the section on the theories of harm. The assessment is holistic, but the focus is on how a merger affects the incentives and ability of the parties and their rivals to compete, innovate, invest and, ultimately, its impact on the competitive process. Additionally, the draft Guidelines make clear that static indicators of market power, such as market shares, may need to be either relaxed or complemented by dynamic ones. For example, if a firm is an “important competitive force” with “more influence on the competitive process than their market share or similar metrics would suggest” or has a “dynamic competitive potential.”
Structural links also make a prominent entry in the draft Guidelines. Minority shareholdings and common ownership in rival firms are recognized as contributing factors to a SIEC, as they may lessen the linked rival firms’ incentives to compete. Minority shareholdings may also be assessed as a stand-alone theory of harm, save for those below 5% when not accompanied by additional rights or links, for which a soft safe harbor is provided. The draft explains that market shares and concentration measures may not fully capture the effects of the merger taking place in the context of common shareholdings in a similar spirit to how the 2004 Horizontal Merger Guidelines considered significant cross-shareholdings an exceptional factor that defied the conventional HHI-based safe harbors. What is missing, however, is an attempt to outline how structural links may also influence the ability to compete or innovate considering the dynamics of control and corporate governance of the linked firms.
But there is another hidden gem in the draft. Non-structural links—think of cooperation agreements and the like—between the merging parties and their rivals may also contribute to a reduction of competition as “participating companies represent a more limited competitive constraint on each other than fully independent rivals.” When such links remove most constraints, the Commission may aggregate the market shares of these firms as an indicator of their combined market position. This raises two questions. First, if market power is subject to a functional test and the choice of organizational structure is no barrier to substantive inquiry as such, does this have implications for the analysis of efficiencies and in particular their merger-specificity? Second, is this a potential flag for artificial intelligence (AI) partnerships and a means for the Commission to assess them as quasi mergers?
The revenge of dynamic competition and the price of flexibility
Innovation is right at the center of the draft Merger Guidelines. This has been a conscious and laudable effort that motivates the entire document. Notably, the systematic incorporation of considerations of innovation in the Guidelines is balanced: we see not only more or new innovation-related theories of harm (loss of specific or general innovation competition, loss of investment and expansion competition, loss of potential competition) but also increased emphasis on efficiencies that increase the ability or incentive to invest or innovate (dynamic efficiencies).
Finally, dynamic competition is taken seriously and, as a result, there is a remarkable shift towards assessing the long-term impact of mergers, which is stated from the outset. In the same vein, the innovation shield is meant to give assurance to innovative startups, and their owners and financiers, that innovation can grow and scale in Europe. Dynamic entry also features in the draft and the timeline for its assessment may be expanded beyond the strict two-year rule of the previous guidelines. A concern about market contestability and reinforced entry barriers brings in a new theory of harm based on “entrenchment of a dominant position,” targeting dominant platform “ecosystems” and looking at market structure, firm incentives and competitive effects in a dynamic way.
It appears that EU merger control, at least from the reading of the text, enters a new era: moving from the Chicago School and Post-Chicago School that centered around static price effects and strategic behavior to embrace a more dynamic competition paradigm. Rather than turning its back to economics, the draft signals a dynamic “more economic approach” to merger enforcement. This ambition brings a lot of opportunities for improvement, but it may also entail risks. Broadening the scope for potential harm or benefit resulting from mergers, softening safe harbors, making the substantive analysis of mergers more comprehensive and open-ended based on an overall assessment of effects and allowing more room for balancing anticompetitive effects against efficiencies translates into more uncertainty for business and more discretion for the Commission.
Brave as it might have been walking this path, the Commission has been careful to underscore in the draft that: (i) it is competition that “is an important long-term driver of efficiency and innovation” and that “generally not only delivers lower prices, but also tends to stimulate greater productivity, investment and innovation” and (ii) while a broader scope for benefits is explicitly acknowledged, the analytical framework for the assessment of efficiencies under the familiar three-prong test (verifiability, merger-specificity, benefit to consumers) remains the same. Accordingly, there is a commitment to both structure and dynamism. In a similar fashion as with the reordering of objectives, by tying the new to the old (or going further back in the past to, for example, the 2004 amendment of the EU Merger Regulation, when the new SIEC test was introduced while keeping the old dominance test precedent), the Commission succeeds in principle in solving the Gordian Knot without risking too much. But the question remains how effectively can this fine balancing be operationalized in practice? With largely unchecked discretion regarding economic matters, as highlighted in the draft, and a less structured substantive review, can the Commission bear the burden it has imposed on itself?
Author Disclosure: The author reports no conflicts of interest. You can read our disclosure policy here.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
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