A new era for EU merger control? Key takeaways from the draft guidelines

Background

In a move closely aligned with the EU’s broader strategy to strengthen Europe’s global competitiveness, the publication of the draft guidelines illustrates how Brussels is reshaping EU merger control for a more contested and dynamic global economy. By proposing a single, streamlined framework to replace the 2004 horizontal merger guidelines and the 2008 non-horizontal merger guidelines, the Commission signals a meaningful shift in how mergers will be assessed going forward.

The reform responds directly to the political and economic imperatives identified in (published in September 2024), which urged a more active role for merger control in supporting European industrial scale, innovation, and resilience. Against the backdrop of intensified geopolitical competition, supply-chain disruptions, and the EU’s strategic autonomy agenda, the draft guidelines acknowledge expressly that “the global geopolitical and trade context has changed” and that “industrial scale and global competitiveness have become increasingly important”. Merger control is reframed as a tool that supports the EU’s broader policy objectives – including competitiveness, resilience, security of supply, and defence readiness – alongside the protection of effective competition.

The review forms part of a wider policy debate on whether EU merger control should better reflect global competition, resilience, and innovation, while still preserving effective competition in the internal market. The draft guidelines reflect this tension, combining a broader enforcement toolkit with a more contextual and evidence-based assessment.

This client alert highlights some of the key changes introduced by the draft guidelines, and discusses their practical implications for transaction planning, deal risk assessment, and engagement with the Commission going forward.

Scale, resilience, and strategic autonomy as pro-competitive factors

In response to Draghi’s report, the draft guidelines treat, for the first time, industrial scale, resilience, and security of supply not merely as policy backdrop but as substantive parameters relevant to the competitive assessment (2026 Draft Guidelines, paras. 17–19, 297–300). Scale-enhancing transactions – particularly those that combine activities across Member States, enable European firms to compete in global markets, or secure access to critical inputs – may be viewed more favourably, provided sufficient post-merger competition remains (2026 Draft Guidelines, para. 13). “Defence readiness” is expressly defined as a relevant resilience parameter, signalling that consolidation in defence, semiconductors, batteries, critical minerals, and other strategically sensitive sectors may benefit from the new framework (2026 Draft Guidelines, para. 15).

It should be emphasised, however, that the underlying SIEC test remains unchanged. The new pro-competitive parameters inform the Commission’s exercise of its existing discretion; they do not displace the legal standard. A transaction that creates or strengthens market power without sufficient countervailing benefits will continue to face a steep climb to clearance, irrespective of its industrial logic.

More room for sustainability and innovation arguments: The “theory of benefit” framework and the innovation shield

Conceptually, the most significant change is the introduction of a structured “theory of benefit” framework (2026 Draft Guidelines, para. 25). What used to be the Commission’s rarely applied “efficiency defence”, pro-competitive arguments under the “theory of benefit” framework are now assessed alongside theories of harm under the same evidentiary standard. The draft guidelines distinguish between direct efficiencies (immediate cost savings or quality improvements) and dynamic efficiencies (longer-term gains in innovation, investment, sustainability, or resilience). The traditional analytical conditions – efficiencies must be verifiable, merger-specific, and beneficial to consumers – are retained, but the scope of recognised benefits is markedly broader.

The draft guidelines significantly broaden the Commission’s approach to efficiencies, explicitly recognising sustainability, resilience, and innovation benefits alongside more traditional cost, price, and quality gains. In addition to short-term efficiencies, parties may rely on longer-term dynamic benefits (including accelerated innovation, improved security of supply, and sustainability outcomes), as well as collective benefits and non-use value (2026 Draft Guidelines, paras. 321 and 337). Importantly, the Commission has moved away from the rigid two-year horizon traditionally applied to the materialisation of benefits, which is particularly significant for capital-intensive sectors with longer investment cycles (such as defence, energy, telecommunications, and infrastructure).

Another novelty is the introduction of an “innovation shield” for acquisitions involving small, innovative companies or R&D projects which the Commission may have labelled as “killer acquisitions” in the past (2026 Draft Guidelines, paras. 192 et seq.). The draft guidelines list five scenarios under which such transactions are unlikely to raise competition concerns and may instead facilitate faster and more effective market entry of innovation.

For example, one of these scenarios relates to an overlap between one merging party’s R&D project with another party’s existing activities and applies if the merging parties do not have a post-merger market share (individually or combined) of more than 40% and there are at least three competitors with R&D projects independent from the merging parties. As a result, the Commission envisages clearing the transaction without finding a significant competition concern. This is a welcome concept, as it creates greater legal certainty and planning comfort for innovation-driven M&A, particularly in early-stage, R&D-intensive sectors.

From safe harbours to flexible screens: A shift in merger assessment certainty

The draft guidelines mark a clear departure from the “safe harbour” thresholds that characterised the 2004 guidelines (2004 Guidelines, paras. 19–21). While similar HHI and market share metrics remain, they now function only as indicative screening tools rather than providing comfort that a deal will be cleared absent further scrutiny (2026 Draft Guidelines, para. 129).

For businesses, this shift results in reduced up-front certainty. Transactions that would previously have fallen squarely within the safe harbours may now attract closer scrutiny, while high market shares no longer automatically give rise to competition concerns, reflecting the Commission’s move towards a more dynamic evidence-based assessment and broader enforcement discretion (2026 Draft Guidelines, paras. 126–129).

The shift is particularly impactful in concentrated markets. Where a transaction results in high combined market shares or a significant increase in concentration, parties should expect a higher evidentiary burden to demonstrate the absence of harm to competition (2026 Draft Guidelines, para. 127). More generally, businesses should anticipate more granular factual and economic assessments, greater reliance on economic evidence, and potentially longer review timelines – including for deals that may previously have been considered low risk.

Expanded theories of harm: Increased merger scrutiny

The draft guidelines materially expand the circumstances in which the Commission may intervene, increasing the likelihood that transactions previously viewed as low risk will now attract closer scrutiny. For businesses, this translates into a need for earlier and broader antitrust risk assessment, particularly in innovation-led, data-driven, and highly interconnected markets, where competitive dynamics evolve rapidly and traditional indicators may be less informative.

A key shift is the Commission’s enhanced focus on “important competitive forces”. Acquisitions of targets with limited or no current market share (such as disruptive entrants, fast-growing firms, or companies with strong R&D capabilities) may still raise concerns where they are seen as exerting, or likely to exert, meaningful competitive pressure (2026 Draft Guidelines, paras. 138–142). This is especially relevant for innovation-driven and growth-stage acquisitions, where future competition, rather than existing overlap, sits at the heart of the assessment.

The draft guidelines also widen the scope for coordinated-effects analysis. Minority shareholdings, joint ventures, and other structural links, as well as reliance on shared data, algorithms, or AI tools, are explicitly identified as potential coordination enablers. As a result, transactions in transparent, data-rich markets are more likely to face probing questions, even where traditional coordination concerns would previously have been considered remote (2026 Draft Guidelines, para. 267).

Access to commercially sensitive information is now recognised as a standalone theory of harm. Transactions that facilitate data access or information flows may therefore be challenged even in the absence of traditional foreclosure or coordination concerns (2026 Draft Guidelines, paras. 282, 286).

The introduction of “diagonal mergers” – where one party controls an input or customer base that is important for the other party’s competitors – further expands intervention risk. Such transactions are singled out for heightened scrutiny and are less likely to benefit from efficiency arguments, increasing uncertainty for parties operating across interlinked levels of the value chain (2026 Draft Guidelines, para. 251).

Finally, innovation harm is elevated to a core theory of intervention. The Commission may intervene solely based on reduced innovation rivalry, including overlaps in R&D pipelines or capabilities, even where there is no clear product market overlap. This significantly raises the bar for R&D-intensive transactions, making early innovation mapping and robust evidence of continued competitive pressure increasingly critical. The graft guidelines thus codify the analytical principles developed in Dow/DuPont and Bayer/Monsanto.

In a notable expansion of the Commission’s enforcement perimeter, the draft guidelines introduce labour markets as a standalone parameter of competitive assessment (2026 Draft Guidelines, paras. 160–162). A transaction may now be assessed for its impact on workers’ wages, working conditions, and mobility where it creates or strengthens monopsony or oligopsony power on the relevant labour market. The Commission has, however, made clear that effects on workers unrelated to competition (such as post-merger restructuring) fall outside the scope of the assessment. The implications are particularly acute for transactions involving specialised workforces with limited alternative employers, such as in life sciences, technology, professional services, and certain manufacturing sectors.

The draft guidelines also codify entrenchment of a dominant position as a standalone theory of harm (2026 Draft Guidelines, paras. 252–258), drawing on the principles applied in Booking/eTraveli. Entrenchment may arise where the merged firm acquires assets that structurally reinforce existing barriers to entry or expansion – such as data, intellectual property, customer-acquisition channels, or critical infrastructure – within a “core market” or across an interconnected ecosystem of related markets. This theory is particularly relevant for digital platforms, technology ecosystems, and other sectors characterised by network effects, scale economies, or customer inertia.

In addition, loss of investment competition is now codified as a separate theory of harm (2026 Draft Guidelines, Section II.B.3), distinct from innovation competition. This recognises that mergers may dampen competitive incentives to invest in capacity, distribution, or other infrastructure even where R&D rivalry is not directly affected – a development of particular relevance for capital-intensive sectors such as energy, telecommunications, infrastructure, and manufacturing.

The draft guidelines also treat non-controlling minority shareholdings and common institutional ownership as potential standalone theories of harm (paras. 163–166). The draft guidelines point out that the competitive pressure may be reduced in situations where one of the merging companies is a non-controlling minority shareholder in a company that competes with the other merging company.

The Commission will not, in principle, consider shareholdings below 5% as relevant in isolation, but holdings at or above this threshold may give rise to a SIEC (Significant Impediment of Effective Competition) even absent additional rights or formal influence. Common ownership across competitors – typically through institutional investors with broad portfolio holdings across a sector – may also be considered as a contributing factor to a loss of head-to-head competition. These developments have direct implications for financial sponsors, sovereign wealth funds, and institutional investors, and warrant careful pre-deal assessment of cross-shareholdings within the relevant industry.

The draft guidelines further list portfolio effects as a distinct theory of harm (paras. 287–290), applicable to mergers combining products that are neither substitutes nor complements but which together strengthen the merged firm’s bargaining position vis-à-vis common customers – for example, by increasing the cost to retailers of de-listing the merged firm’s products or by increasing the cost and risk of patent litigation for rivals.

Holistic value chain assessment and counterfactual analysis: Broader scope, greater evidentiary demands

Rather than focusing narrowly on classic vertical relationships (e.g., input or customer foreclosure), the draft guidelines decisively move away from the traditional, category-based approach to non-horizontal mergers. Where the 2008 guidelines assessed foreclosure primarily at individual levels of the supply chain, the new draft guidelines require the Commission to assess competitive effects more holistically across the value chain and across related markets, taking into account the parties’ position and influence at multiple levels of supply and distribution (2008 Guidelines, paras. 3–6, 28–32, 58–60; 2026 Draft Guidelines, para. 249). This means transactions may face scrutiny beyond their immediate overlaps, including indirect or ecosystem effects across related markets, as well as in circular-economy contexts.

At the same time, the draft guidelines introduce a more structured, yet potentially more flexible, approach to the counterfactual analysis. While the Commission will continue to compare how the market is likely to develop with and without the merger, it may now depart from prevailing conditions where there is convincing evidence of expected change, such as evolving market trends or credible alternative transactions (2004 Guidelines, para. 9; 2026 Draft Guidelines, paras. 37–44).

This creates an opportunity for parties to argue that any deterioration in competitive conditions would have arisen even absent the deal. However, this flexibility comes with higher evidentiary expectations: Arguments must be supported by robust, contemporaneous pre-deal evidence, and parties are expected to provide supporting material early in the review process (2026 Draft Guidelines, para. 29).

In practice, companies should anticipate a broader and more integrated competitive assessment, combined with a heightened need to substantiate forward-looking arguments with robust internal documents and market evidence. Early preparation and consistency between deal rationale, internal materials, and counterfactual narratives will be critical.

Member State intervention and the one-stop shop

The draft guidelines also clarify the limits of Member State intervention in transactions falling within the Commission’s exclusive jurisdiction. Building on Article 21 of the EU Merger Regulation (EUMR), the Commission has signalled a more robust stance against fragmentation of the one-stop shop, including a presumption that intra-EU mergers are not, as such, contrary to a Member State’s public security interests. Member State action under Article 21(4) of the EUMR remains possible to protect legitimate non-competition interests – public security, media plurality, and prudential rules – but the Commission has signalled that it intends to police the boundaries of those carve-outs more closely, particularly in energy, banking, media, and telecommunications.

The interface between EU merger control and national foreign direct investment (FDI) screening regimes – increasingly tested in recent cross-border energy, banking, infrastructure, and technology transactions – will remain a critical area of strategic planning. While the draft guidelines do not affect Member States’ powers under their own FDI legislation, they raise the prospect of more vigorous Commission scrutiny where Article 21 is invoked alongside, or in substitution for, FDI tools.

Document hygiene as a deal risk: Heightened scrutiny of internal evidence

The draft guidelines place materially greater weight on internal documents, reinforcing the importance of careful document creation and management. Strategy and planning materials using terms such as “rationalisation”, “capacity discipline”, or “pricing leadership” may be interpreted as signalling reduced competitive pressure or coordination concerns (2026 Draft Guidelines, paras. 180, 194).

The draft guidelines codify the evidentiary principles developed in Wieland-Werke, confirming that contemporaneous, ordinary-course documents – especially those prepared close in time to the transaction and by operational teams – are treated as particularly reliable evidence (paras. 39, 50). Documents addressing pricing, capacity, or competitive dynamics, as well as statements against a party’s interest, carry heightened probative value (2026 Draft Guidelines, paras. 39, 53).

For businesses, this means internal materials can play a decisive role in merger reviews. The Commission retains broad discretion in assessing evidence and may even rely heavily  on a single document  where it is considered credible (2026 Draft Guidelines, paras. 42, 52, 54–55). Importantly, the absence of problematic documents does not, in itself, reduce risk (2026 Draft Guidelines, paras. 51–53).

These principles apply equally to defensive arguments. Efficiency and counterfactual claims will be most persuasive where they are supported by pre-existing, non-transactional business documents, rather than by materials prepared specifically for the merger process (2026 Draft Guidelines, paras. 36–37, 363).

Conclusion

The draft guidelines point toward a more flexible and more evidence-intensive approach to EU merger control. Transactions that may previously have appeared straightforward could now face broader scrutiny, particularly where the Commission perceives risks relating to future competition, innovation, information flows, or wider value-chain dynamics.

For businesses, the practical takeaway is the need for earlier antitrust assessment, stronger evidentiary preparation, and rigorous document discipline from the outset. While the draft guidelines offer greater scope to advance scale, sustainability, resilience, and innovation arguments through the new “theory of benefit” framework, they also signal a merger review process that is likely to be less predictable and more demanding in practice.

Next steps: The Commission has launched a public consultation on the draft guidelines, with a deadline for comments of 26 June 2026 and a stakeholder workshop scheduled for 10 June 2026. The final text is expected by the end of 2026. Importantly, the Commission has indicated that it will already apply the analytical concepts set out in the draft guidelines to ongoing cases, meaning that the new framework has immediate practical implications for live transactions. Parties contemplating notifiable transactions should engage in a substantive antitrust risk assessment under the draft guidelines now and consider whether to participate in the consultation – either directly or through trade associations – to influence the final text.