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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.
Teresa Ribera, the EU’s competition chief, said that the changes would encourage “pro-competitive mergers that allow European players to grow and accelerate innovation and have the scale to be relevant players”, adding that the bloc needed to “develop a firm defence against external chaos”.
The EU’s decision to revamp its approach comes after several crises, including the energy shocks unleashed by Russia’s full-scale invasion of Ukraine and the Iran war, which highlighted Europe’s economic weaknesses and hurt growth in the region.
Industries have long pushed for Brussels to loosen merger rules regarded as obstacles to building companies with the scale needed to compete both across Europe and on the global stage.
A 2019 decision by Brussels to block the merger of Germany’s Siemens and France’s Alstom has been cast as emblematic of the EU’s failure to allow the creation of “European champions” — in that case capable of challenging China’s CRRC.
“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.
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