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Background
On 30 April 2026, the European Commission published its draft new Merger Guidelines for public consultation, setting out how it will assess M&A transactions with an EU dimension. The draft Guidelines signal a recalibration of EU merger policy to align competition enforcement with broader industrial policy objectives, including scale, competitiveness, resilience, and security, in accordance with the mandate of Executive Vice-President Teresa Ribera. The draft Guidelines would also implement several recommendations from the Draghi Report on competitiveness, putting emphasis on innovation and accounting for the impact of M&A on EU security and resilience.
While the underlying legal test is unchanged and most transactions will be assessed broadly as before, the draft Guidelines represent a significant evolution of the analytical framework for complex cases, with material implications for EU industry and dealmakers.
Key things to know about the Draft Guidelines
(1) Familiar rules for most transactions
The underlying legal test for assessing mergers under EU rules remains unchanged. The Commission will continue to assess whether an M&A transaction results in a significant impediment to effective competition in the EU. The draft Guidelines do not, therefore, fundamentally alter the way in which most mergers will be assessed going forward. Instead, they consolidate the Commission’s previous horizontal and non-horizontal guidance into a single document and codify how its decisional practice has developed over the past two decades. This includes the acknowledgement that the Commission’s competitive assessment now clearly accounts not only for price effects, but also for non-price parameters such as innovation, investment, resilience, and sustainability.
What this means: Businesses can take comfort that most transactions will continue to be assessed under familiar principles but should ensure their M&A risk analysis reflects the Commission’s expanded focus on non-price parameters.
(2) A pro-scale, pro-competitiveness approach: when bigger deals make strategic sense
The Commission has adopted a markedly more positive tone towards mergers that enhance industrial scale and European competitiveness, expressly endorsing “mergers that increase procompetitive scale while maintaining effective competition in the internal market” and acknowledging that scaling-up is necessary to compete in global markets, particularly in capital-intensive and innovation-driven sectors.
The Guidelines identify several examples where the creation of “European champions” through scale-enhancing mergers may be viewed favourably, including mergers that:
- Combine complementary capabilities
- Enable cross-border expansion within the EU without generating significant overlaps
- Strengthen R&D capabilities
- Enable companies to compete in global markets when they face pressure from few global incumbents
- Enhance resilience through investments in critical infrastructure
- Secure access to critical inputs
- Enable defence projects and strengthen the EU’s defence readiness
As a result of the new Guidelines, transactions that can credibly be framed as supporting European competitiveness (i.e., European champions), particularly against global rivals, should face fewer hurdles. This is a significant and welcome shift from the Commission’s historically cautious stance on the benefits of M&A.
What this means: Businesses should engage early with the Commission on transactions that may raise concerns to highlight the scale-enhancing benefits that justify clearance.
(3) Revised safe harbours
The draft Guidelines include indicative safe harbours, which signal to businesses that certain transactions are unlikely to raise concerns. Previously, different market share and market concentration thresholds, measured through the Herfindahl-Hirschman Index (HHI), applied depending on the type of merger (i.e., horizontal vs non-horizontal). The new draft Guidelines introduce unified thresholds applicable to all merger types. The most notable change is the removal of the 30% market share safe harbour for non-horizontal mergers, which also required a post-merger HHI below 2,000. This is now replaced by a unified safe harbour framework, including a lower 25% market share threshold.
Soft safe harbours
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Past guidelines |
New draft Guidelines |
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For horizontal mergers (i.e., acquisitions of competitors):
For non-horizontal mergers:
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Same safe harbours apply to all merger types:
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These safe harbours are indicative, and the Commission retains discretion to investigate where special circumstances are present. Nevertheless, they provide clear guidance for businesses to assess their merger control risks. Transactions that do not fall within these safe harbours will be closely assessed by the Commission to ensure they do not harm competition.
What this means: Businesses should reassess pipeline transactions against the Commission’s updated safe harbour conditions to identify which transactions are likely to qualify for a safe harbour and therefore face less scrutiny.
(4) Guidance on most common theories of harm
Where the Commission has substantive concerns regarding a merger, it must substantiate these concerns through a theory of harm, setting out how the merger may give rise to anti-competitive effects. The draft Guidelines provide detailed guidance on the most common situations where the Commission will raise substantive concerns, including:
- Loss of head-to-head competition, especially where parties have high market shares or are close competitors, the market is highly concentrated, or the target is an important competitive force
- Elimination of investment and expansion rivalry between the merging firms, particularly in infrastructure-heavy industries such as energy and telecoms, where businesses compete through investments in capacity, networks, and technologies.
- Elimination of innovation competition between the merging parties or impeding of overall innovation capabilities in the industry.
- Loss of potential competition from a company that is not yet active in the market, but has the potential to compete with the acquirer, especially in markets with few and/or smaller competitors.
- Customer and/or input foreclosure. The draft Guidelines build on the previous guidance regarding these concerns and go further by stating that “diagonal mergers”, where a party with no pre-existing commercial relationship with the target acquires, through the target, control of a product or customer base accessed primarily by the competitors of that party, could lead to foreclosure effects.
- Entrenchment of a dominant position, such as where the merged firm gains control over assets in a way that structurally creates or reinforces barriers to entry and expansion. This requires that at least one of the merging firms is dominant in one core market or several closely related or “interconnected” markets. This will be of particular importance to digital ecosystem operators.
- Increasing the risk of collusion between competitors or making existing collusion more stable, with a particular focus on markets relying on pricing algorithms and AI capabilities, such as e-commerce and airlines. AI and algorithmic pricing may increase market transparency and make it easier for firms to monitor the behaviour of their competitors.
- Giving the merged entity access to commercially sensitive information of rivals, such as pricing, product strategies, or customer data, which may enable the merged entity to price less aggressively, undermine rivals’ incentives to compete, or facilitate coordination.
- Increasing the merged entity’s market power over a portfolio of products and thereby strengthening its bargaining position vis-à-vis customers. In particular, a merger combining complementary products sold to the same customer base may raise concerns, even if there are no horizontal or vertical overlaps in the activities of the merging parties.
While these theories are familiar from past case practice, their consolidation in a single document makes it easier for businesses to anticipate the issues their transactions may raise, as well as the factors that may neutralise them.
What this means: Businesses contemplating M&A activities should map their transactions against the Commission’s updated theories of harm, particularly in digital ecosystems, algorithmically priced markets, and markets where either party has a strong position, to identify and proactively address potential concerns early in the process.
(5) Labour market theory of harm
A notable feature of the draft Guidelines is the inclusion, for the first time, of explicit principles on the assessment of a merger’s effects on labour markets. The draft Guidelines recognise that a merger between employers may give rise to substantive concerns in the market for the purchase of labour. The Commission will assess whether a merger creates or strengthens monopsony or oligopsony power on labour markets, potentially leading to lower wages, worse working conditions, reduced worker mobility, and harm to downstream customers. Substantive concerns are more likely where workers have few alternative employment options, for example where the merging firms rely on a specialised workforce. The workers’ countervailing power, particularly through effective collective bargaining agreements, and relevant social and labour regulations may limit these concerns.
The inclusion of labour market effects in the draft Guidelines is a significant development in EU merger control. While the Commission has previously considered purchasing-side market effects in specific cases, dedicated guidance treating labour markets as a discrete potential theory of harm is new and aligns the Commission’s approach with the 2023 US Merger Guidelines.
What this means: Parties to transactions in sectors with specialised or concentrated labour pools should proactively assess whether their transaction could reduce competition for workers and prepare evidence of countervailing factors, such as collective bargaining agreements.
(6) “Innovation shield”: a new safe harbour for acquisitions of start-ups and innovative companies
One of the most notable additions in the draft Guidelines is the implementation of the “innovation shield”, as recommended by the Draghi Report. This is a new safe harbour for acquisitions of small innovative companies, start-ups, and R&D projects. The Commission will, in principle, not raise substantive concerns over transactions involving small innovative companies or start-ups, provided the parties do not overlap in the same relevant market or innovation space, or where overlaps exist, their combined market share remains below specified thresholds and a sufficient number of independent competitors with comparable potential remain. Crucially, acquisitions of start-ups by firms that are not the largest player in the relevant market or a “gatekeeper” under the EU Digital Markets Act may benefit from more lenient conditions.
This is a clear shift in the Commission’s approach to acquisitions of innovative start-ups, which were previously often referred to as “killer acquisitions” and were treated suspiciously by the Commission, even where they did not meet the EU thresholds for review. Acquiring innovative targets may now be easier under the new Guidelines if structured correctly. Businesses can now self-assess their eligibility for the innovation shield and pursue investments in innovative targets with greater predictability.
What this means: Acquirers of start-ups and innovative companies should collect market intelligence regarding potential competitors in the relevant product market or innovation space to assess their eligibility for the innovation shield early in deal planning.
(7) First ever EU guidance on minority shareholdings
The draft Guidelines introduce, for the first time, guidance on minority shareholdings and common ownership in competing firms. The draft Guidelines explain that, where one of the M&A parties holds a non-controlling minority shareholding in a competitor of the other M&A party, the merger may reduce competitive pressure between the competitor and the other M&A party due to the minority shareholder’s financial interests, its influence, or information flows. Such minority shareholdings could lead to a stand-alone theory of harm in the Commission’s assessment and could necessitate remedies, such as structural divestments of minority interests. This is particularly relevant for institutional investors or private equity firms, which usually have a broad range of investments.
The draft Guidelines include a safe harbour, applicable where the minority shareholdings of the merging firms are below 5%. In such cases, the Commission will in principle not consider such shareholdings as a cause for substantive concerns, unless these are accompanied by additional rights or links.
What this means: Investors and private equity firms should map their portfolios and minority interests to identify any potentially problematic cross-shareholdings, assess potential safeguards, and pre-empt remedies discussions.
(8) Theory of benefit: a revamped efficiencies framework
One of the most consequential developments in the draft Guidelines is the Commission’s clear signal that efficiencies will play a more central role in merger review. Under EU merger control, an otherwise problematic merger may, in theory, be justified by efficiencies. In practice, efficiencies have not yet saved a transaction that the Commission considered harmful to competition. The draft Guidelines seek to change that. The Commission now expressly states that “demonstrated efficiencies will play a key role in the assessment of mergers going forward”.
The draft Guidelines distinguish between “direct efficiencies” (i.e., cost savings, quality improvements) and a new category of “dynamic efficiencies”, which relate to the ability or incentive to invest or innovate. Dynamic efficiencies may include, for example, combining complementary R&D assets to develop new products, achieving economies of scale or scope that reduce the incremental cost of innovation, or providing access to finance for financially constrained firms. Importantly, the substantive test for the Commission to accept the claimed efficiencies remains demanding, requiring that such efficiencies are verifiable, merger-specific, and benefit consumers. Efficiencies that benefit consumers without delay will generally have more impact in the Commission’s assessment than those that may arise only in the long term but may still be relevant if consistent with the market dynamics.
The Commission also expressly acknowledges, for the first time, that resilience and sustainability benefits may constitute verifiable, merger-specific efficiencies in appropriate cases. Resilience-related benefits may come from the combination of complementary assets leading to increased security of supply, from access to critical inputs reducing supply chain exposure, or from the creation of more resilient products. Sustainability-related efficiencies may arise where the merger reduces environmental pollution, improves access to sustainable inputs, or enables the development of more sustainable products.
The Commission has already highlighted the value of early discussions on efficiencies in its recent clearance of a joint venture in the aviation sector. As a result, where a merger could lead to potential competitive concerns, businesses should strive from the outset to identify and substantiate both direct and dynamic efficiencies, especially as regards improved competitiveness, resilience, and sustainability. Such efficiencies will be crucial in borderline cases but are not expected to save otherwise highly problematic deals.
What this means: M&A parties should build the competitiveness, resilience, and sustainability narrative early in pre-notification discussions, including supporting evidence on dynamic efficiencies, R&D synergies, security of supply, and environmental benefits, and ensure this narrative is reflected in deal documentation, internal documents, and merger filings.
(9) New guidance on Member States’ measures to protect legitimate interests
For the first time, the Commission’s merger guidelines address how Member States may exercise their right to block or impose conditions on mergers with an EU dimension to protect their legitimate interests other than competition. The draft Guidelines set out the substantive conditions under which Member State measures will be considered compatible with EU law, including the requirement that measures must pursue a genuine legitimate interest (such as public security, media plurality, or prudential rules) and must comply with the principles of proportionality and non-discrimination. The Guidelines emphasise that Member States bear the burden of proving that their measures comply with the substantive and procedural obligations under EU law, and that acquisitions by companies from other Member States cannot be treated less favourably than acquisitions by domestic companies.
This is welcome guidance for businesses, reinforcing the “one-stop-shop” principle of EU merger control rules and improving predictability by setting clear limits on the ability of Member States to take unilateral measures.
What this means: The draft Guidelines reduce the risk of individual national measures affecting cross-border deals, giving more certainty to deal-makers, who can now more easily challenge the compatibility of any Member State intervention with EU merger control rules.
Outlook and next steps
The public consultation of the draft Guidelines will be open for comments until 26 June 2026, with the final adoption of the Guidelines expected in Q4 2026.
The draft Guidelines represent a significant evolution of the Commission’s merger assessment framework. The new focus on improved competitiveness reflects the wider push to strengthen the EU’s industrial and technological position in light of increasing global competition. At the same time, the wider geopolitical context and climate crisis necessitate a renewed focus on resilience, security of supply, and sustainability, with the draft Guidelines reflecting how crucial these factors have become. The new framework reflects the Commission’s pro-competitive ambitions, but whether this will lead to substantially different results in practice remains to be seen.
In-depth 2026-103