Revision of the EU Merger Guidelines

Over the past two decades, EU merger control - as one of the cornerstones of European competition policy - has played a key role in ensuring that corporate mergers do not distort competition and that consumers are protected from harm. In view of profound changes in the global economy, a new geopolitical environment and the need to place greater emphasis on Europe's strategic autonomy, the Commission wants to upgrade the EU’s merger control guidelines without jeopardising the fundamental, tried and tested principles of competition.

In a Study, cep analyses the options for reform and focuses on the financial sector. Close attention is given to the questions of whether the EU’s global competitiveness should play a greater role in the definition of a relevant market and how efficiency gains will be weighed up against the competitive disadvantages of a merger, under future merger control guidelines.

The two authors of the cepStudy confirm that the key pillars of merger control legislation are still valid 20 years after its introduction. "There is therefore no need for a fundamental redesign of the framework. Nevertheless, targeted modernisation is essential to meet global challenges and dynamics," says Philipp Eckhardt, economist in cep’s Financial Markets Department.

The authors propose a new approach to market definition. According to Anastasia Kotowski, a legal expert in cep’s Financial Markets Department, "when defining a geographical market, there needs to be greater consideration given to global competition, i.e. competitive pressure from non-EU companies, and we need to take a more forward-looking perspective".

With regard to the consideration of potential efficiency gains arising from a merger, the experts recommend giving recognition not only to short-term, static effects, but also and above all to long-term and dynamic efficiency gains, and also giving more weight to possible efficiency benefits outside a relevant market. However, cep warns against giving blanket preference to strategically important sectors. Instead, Eckhardt calls for “the guidelines to specify more clearly whether and how strategic considerations should be taken into account in merger control”.

The cepStudy was conducted with the support of the Deutsche Börse AG.