European companies that pursue acquisitions spanning multiple member states may find it easier to secure competition approval under a planned revision of the EU's merger framework, people with direct knowledge of the discussions said.
The European Commission is preparing to define criteria that will guide merger approvals as part of an overhaul of rules that date back to 2004. According to the sources, a draft version of the proposed changes will be published in the spring for public feedback ahead of any formal implementation by regulators.
The push to favour pan-European transactions is intended to help firms build scale so they can better compete with non-EU rivals. Business groups, and telecom operators in particular, have been calling for more flexible EU merger rules so they can consolidate and expand. The proposal also comes against a backdrop of efforts across Europe to reduce economic dependence on the U.S. and China.
Regulators are said to prefer pan-European consolidations over deals conducted at the national level, arguing that national deals can concentrate market power in the hands of a few domestic players. The Commission - which enforces competition rules within the EU - declined to comment on the matter.
Sources described how the discussion over which merger benefits should be taken into account by competition authorities has been narrowing. The list of potential benefits now being considered includes innovation, sustainability, resilience, investment and employment. Of these, innovation claims are viewed as the most persuasive, because the other factors are harder to quantify in merger assessments.
Under the traditional EU merger framework, regulatory scrutiny has focused on preventing transactions that would lead to higher prices for consumers or a reduction in available products. Critics argue that the current focus should be broadened to encompass a wider set of considerations - such as innovation and investment - when assessing the competitive impact of deals.
Implications for stakeholders
- Companies pursuing cross-border consolidation may be better positioned if the Commission adopts pan-European-friendly criteria.
- Telecommunications operators are among the sectors most explicitly seeking looser merger rules to achieve scale.
- Regulators will need to balance traditional competition concerns about prices and product choice with newer considerations like innovation and investment.