Response to the European Commission’s Consultation on the Draft EU Merger Guidelines

In line with the objectives of the EU Treaties, the EU merger rules aim to enable a dynamic, functioning internal market; by making sure all businesses are able to compete effectively, preventing market distortions that harm European businesses and consumers and ultimately damage productivity and economic growth. While companies combining forces through mergers can generate efficiencies, create pro-competitive scale and bring benefits to the EU economy, some mergers may significantly impede effective competition. This is why the EU has had a system for reviewing mergers of an EU dimension since 1990 (with Regulation 4064/89) to check their compatibility with a properly functioning internal market, known as the “EU Merger Regulation” — a regulation that was updated in 2004 (Regulation 139/2004) and remains in force today.

Mergers “are to be welcomed to the extent that they are in line with the requirements of dynamic competition and capable of increasing the competitiveness of European industry, improving the conditions of growth and raising the standard of living in the Community”¹. Article 2 of the EU Merger Regulation requires the European Commission to assess whether a merger would, or would not, “significantly impede effective competition, in particular as a result of the creation or strengthening of a dominant position.” Where the Commission finds no such impediment, the merger is to be approved; if, alternatively, the Commission concludes that the merger would lead to such an impediment, unless the merging parties submit measures remedying this impediment, the merger is to be declared incompatible with the internal market.

EU merger control needs to remain sharp and up to date as market realities change around it. The objective of merger control, in accordance with the EU Merger Regulation, remains valid and unchanged, ensuring mergers do not distort competition in the internal market. However, over the 20+ years since the updated 2004 EU Merger Regulation and its accompanying guidelines, significant market trends and geopolitical developments have transformed markets, leading the Commission to reassess mergers to protect competition under these new realities. Case law of the Court of Justice has also informed the Commission’s interpretation of the Merger Regulation and its guidelines.

The draft Merger Guidelines will replace the Horizontal Merger Guidelines² (“HMG”) (published in 2004) and the Non-Horizontal Merger Guidelines³ (“NHMG”) (published in 2008) (jointly, the “Guidelines”). The goal is to ensure the revised Guidelines are up to date and flexible enough to allow the Commission to protect competition under the Merger Regulation in evolving modern market realities, while always respecting the overarching legal framework and contribute to the competitiveness and resilience on the Internal Market. In addition, the revised Guidelines should provide increased transparency and predictability to the business community as to how the Commission assesses mergers.