‘Magic Words’ Risk Undermining Significant Progress in Merger Review Guidelines
Open Markets Institute has welcomed the European Commission's draft merger guidelines as a major, overdue modernisation of EU competition rules – part of a once-in-a-generation review – while also urging the Commission to close loopholes which risk undermining progress.
In its submission to the Commission, Open Markets Institute praises significant reforms, but warns the Commission to treat self-serving “scale” and efficiency arguments pushed by the biggest firms with greater skepticism.
“The Commission has done impressive work to update these rules for the 21st century, but the current draft includes loopholes that could undermine the whole project,” said Max von Thun, Director of Open Markets Institute Europe. “As drafted, ‘efficiency’ and ‘scale’ risk becoming magic words that dominant firms can whisper in order to clear almost any deal – flooding overstretched case teams with speculative claims they don't have the resources to disprove. Troublingly, this language appears to reflect not research and experience, but intense lobbying for weaker enforcement by large European firms and their political allies. We’re proposing a set of clean fixes and one significant but commonsense change: If you're already a massive, dominant firm, the burden should be on you to prove further consolidation won't make things worse, not the commission.”
Since the Commission's last merger guidelines update in 2003, market concentration has risen sharply across Europe – handing a shrinking number of firms the economic muscle to lock in customers, squeeze suppliers and workers, and convert that power into political influence. Between 2015 and 2024, the Commission reviewed 2,833 mergers and blocked just nine, imposing conditions in only around five percent of cases.
“We need to admit that Europe has allowed a level of consolidation that has proved damaging over the last two decades, leaving us with a more fragile and concentrated economy, dangerously reliant on US Big Tech firms, and with our own set of too-big-to-fail firms that wield outsized political and economic power,” von Thun said. “We cannot afford to repeat that mistake.”
Read OMI’s full submission here, our ProMarket op-ed or our summary below.
What the Draft Gets Right
Reflecting two decades of experience and a growing body of research into how market structure shapes economies, the draft guidelines represent a serious, overdue attempt to equip merger control for the realities of a digitalised, concentrated, and geopolitically contested economy.
The guidelines recognise that judging mergers through the narrow prism of short-term consumer prices misses much of the damage concentrated markets do – to supply chains, innovation, workers, information systems, economic resilience and democratic control.
Eyes Wide Open: The draft broadens the objectives that merger control seeks to protect and widens the parameters that may be assessed. The past practice of focusing on consumer welfare has at times prevented comprehensive merger reviews.
A Stronger Europe: New policy objectives include critical European priorities, including supply chain resilience, reducing dependencies, privacy, sustainability, media plurality and democratic accountability.
Labor Recognition: The draft formalizes the Commission's ability to weigh a merger's impact on pay and conditions – especially where a deal creates or strengthens monopsony power over labour.
Recognition of Market Power: The draft gives market dominance greater weight, which is important because the more market power at stake, the more likely a deal is to cause harm (and the less likely efficiency claims are to outweigh it).
Catching up with reality: The draft moves beyond the rigid horizontal/vertical/conglomerate boxes, includes new theories of harm like entrenchment, and formally recognizes ecosystems, minority shareholdings, and network effects – a long-overdue update for markets, especially in tech, that the old categories could no longer capture.
Closing Backdoors and Loopholes
For all its ambition, the draft carries a dangerous assumption in its margins: that bigger is usually better – and that scale and consolidation deliver efficiencies that are worth significantly weighing against competitive harm. The weight of evidence and experience says otherwise.
Left unchanged, a handful of provisions would turn that single assumption into a set of ready-made exits – routes to clearing exactly the deals the rest of the draft is built to catch.
Bigger Isn't Better: The draft too readily accepts that scale and consolidation deliver efficiencies that drive positive benefits, including lower prices and innovation. The evidence – including from the OECD – says otherwise: Such benefits are routinely overstated, rarely materialise in concentrated markets, and seldom reach consumers. More often, they flow to capital owners.
Stick to the Facts: The new theory of "dynamic efficiencies" – promised future gains in innovation and investment – is almost impossible to verify and enforce, and is easy to fabricate. It hands well-resourced multinationals a ready-made excuse to justify deals, weakening enforcement against the largest firms. It should be deleted.
The Scale Myth: The draft's new class of "scale-enhancing mergers" rests on the contested premise that Europe's firms must merge to compete globally. After two decades of near unrestricted consolidation in Europe, it’s unclear why continued consolidation now would achieve this. In the view of leading economic analysts, mergers are not how innovative and competitive firms gain scale – the best path is a deeper single market and better integrated capital markets. Scale arguments should be exceptional, off-limits to the largest players, and subject to a strict test requiring parties to prove they cannot reach the same size through fair market competition.
Catch and Kill: The proposed "innovation shield" risks handing certain start-up and R&D acquisitions a near-automatic pass – an open door for certain industries to buy and bury emerging rivals. It should never apply to acquisitions by dominant firms.
Promises, Promises: Commitments to offset structural market damage with investments and behavioural commitments have failed time and again. The Commission cannot wave through deals that permanently reshape markets based on speculative promises.
The Big Idea: Dominant Firm Must Shoulder the Burden of Proof
OMI Europe's biggest recommendation is simple but significant: Flip the burden of proof. Where a dominant firm requesting merger approval, it should have the burden of proving that further consolidation won’t harm competition.
Mergers involving firms with significant market power are far more likely to harm competition and far less likely to deliver the efficiencies they promise. There should be an explicit legal presumption of illegality for mergers involving dominant firms which the party with most to gain from the deal, and the best access to the evidence, should be required to rebut.
Flipping the burden also significantly eases the strain on the Commission itself, freeing scarce case-team resources for the complex DMA and antitrust work that only regulators can do.
None of this asks the Commission to stand in the way of Europe's success. It asks the opposite: that the firms already large enough to shape markets prove their next acquisition will build a more open and resilient Europe, rather than simply entrench their own power.
The draft Guidelines are a necessary and overdue evolution in how Europe approaches mergers, but simultaneously risk handing the keys to powerful incumbents seeking to lock in their dominance. With a handful of targeted changes, however, they can deliver on their promise: Open, diverse, competitive, innovative and resilient markets that work for everyone.