Freshfields' response to the European Commission’s consultation on the new draft EU Merger Guidelines

The European Commission’s long-awaited draft revision of the EU Merger Guidelines marks a defining moment for merger control in Europe. More than two decades after the last comprehensive update, the draft seeks to recalibrate the balance between robust enforcement and enabling businesses in Europe to scale in increasingly competitive global markets.

We have explored the substance of the draft Guidlines across two podcasts — one in conversation with Daniele Calisti, Head of Unit for Merger Policy and Case Support at the European Commission, and one addressing what actually changes in practice. We have also taken further deep-dives into the draft across our earlier blog posts focusing on the shift in political narrative and the new efficiencies framework (Geopolitics and efficiencies brought to the fore: a new dawn for merger control in Europe), the expanded toolkit of theories of harm (A sharper arsenal: the Commission’s new theories of harm and what they mean for your deals), and the Commission's treatment of Member State intervention under Article 21 (Where national interest ends: the Commission’s new guidance on Member States’ powers).

We have now submitted our full response to the consultation, which you can read (here). This post summarises its central themes. In short, we welcome the draft Guidelines’ recognition of the wider benefits of pro-competitive mergers, while urging the Commission to avoid statements in the final text that would make merger review more burdensome or unpredictable.

The big picture: ambition that depends on application

The draft Guidelines have expanded in all directions — both the number and scope of theories of harm have grown, alongside welcome new guidance on efficiencies. Whether they will represent a genuine change depends on their application in practice.

The mandate underpinning the overhaul is clear: to make pro-competitive mergers easier, not to make mergers generally more difficult. That aim will be undermined if the expanded theories of harm, and the significant discretion the Commission has asserted for itself, lead to greater scrutiny without a corresponding increase in the evidential basis required for intervention. We have therefore urged the Commission to clarify when particular theories of harm will be relevant to a given transaction. 

Market power: a presumption in all but name?

We welcome the Commission’s more transparent approach to the structural metrics it uses to assess market power, and its decision not to introduce formal rebuttable presumptions or reverse the burden of proof.

Our concern is more subtle. The draft Guidelines state that the Commission “requires substantial evidence pointing away from a [substantial lessening of competition]” in markets where the merged entity has high combined shares or markets are highly concentrated. A shift in evidentiary expectations based on structural indicators alone is, in our view, a presumption in all but name. Since the burden of proving a significant impediment to effective competition rests entirely with the Commission, we have asked it to confirm that that this language does not alter the allocation or intensity of that burden.

The new market power indicators — profit margins, low price sensitivity and dynamic competitive potential need clearer benchmarks and must be applied even-handedly to show both the existence and the absence of market power. 

Anti-competitive effects: toolkit without discipline 

Our central concern is that the materially expanded toolkit is not matched by a corresponding increase in evidentiary discipline. Several of the new theories of harm — particularly the dynamic theories — are inherently forward-looking and difficult for merging parties to rebut.

The further the analysis looks into the future, the less certain the evidence becomes — creating a risk that the Commission can assert speculative long-term harm on a thinner evidential basis than merging parties must meet to rebut it. Our recommendation is that all new theories be applied with the same rigour the Commission expects of a theory of benefit. 

We welcome the Innovation Shield as a genuinely positive development for acquisitions of small innovative companies, subject to several improvements, and we are seeking concrete limiting principles for the entrenchment theory — which draws heavily on a single decision – Booking/eTraveli – before the General Court has even ruled on appeal. 

Efficiencies: formal symmetry must become substantive symmetry 

The introduction of a formal “theory of benefit” as a parallel to theories of harm is unreservedly welcome. Efficiencies have historically been treated as a reactive afterthought so the true test will be whether the Guidelines deliver substantive, rather than merely formal, change. For this to happen, dynamic efficiencies in particular must not be held to a higher evidentiary standard, a stricter timeliness test, or a more demanding balancing standard than the comparable forward-looking theories of harm. 

What this means for dealmakers

The Commission is expected to begin applying the underlaying concepts ahead of formal adoption, so there is no benefit in waiting for that process to conclude. 

The framework rewards early, evidence-led engagement. The expanded theories of harm now apply to every notifiable transaction, so the days of focusing only on the most obvious overlap are over — a comprehensive theory of harm assessment is required from day one.

Conclusion

The draft Guidelines are an important opportunity to deliver a clearer, more modern and more predictable framework for merger review. But that opportunity will only be realised if the Commission’s welcome ambition is matched by clear evidentiary standards, limiting principles and procedural safeguards, and a consistent application of them in practice. In short, the draft Guidelines should make pro-competitive mergers easier — not render merger review more burdensome or intervention more speculative.