The European Commission published its draft “guidelines on the assessment of mergers under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings” yesterday. The title does what titles of merger guidelines usually do: it lowers expectations. That is useful misdirection. The document itself is anything but dull.
The draft guidelines span more than 100 pages and raise a host of issues. This post zeroes in on one that should give competition lawyers pause: the quiet politicization of competition law through soft-law instruments that sidestep—and ultimately erode—the coherence of established frameworks.
On the surface, the document updates the European Union’s merger-review framework. Read more closely, and a different project emerges: a systematic effort to advance industrial policy through competition law, dressed up as technical refinement.
What follows breaks down how the guidelines do this, the mechanisms they deploy, and why that trajectory should concern you.
Nothing New Here (Except What’s New)
It is true, as some have argued, that much of the document codifies existing case law. Its treatment of market shares and Herfindahl-Hirschman Index (HHI) thresholds, the counterfactual framework, the failing-firm doctrine, and much of the foreclosure analysis tracks established European Commission practice and court-endorsed principles. Guidelines that do this perform their proper function, i.e., they codify rather than create new law.
The problem lies in what’s actually new. Those elements appear to do something quite different.
The most consequential expansion concerns “parameters of competition.” Paragraph 20 states that:
Non-price competition can encompass a variety of parameters to the extent they are relevant for the competitive process in the markets at hand, including output and quality in various aspects, also covering choice (which may include media and cultural diversity), capacity, investment, innovation , privacy, sustainability, resilience (including security of supply). A merger can have an impact on one or multiple parameters of competition, and that impact is subject to an overall assessment. Many non-price parameters are not readily subject to quantification. Some of them, among other things, may also reflect the objectives of EU policies recognised by the Treaties.
In addition:
The Commission enjoys a margin of discretion in weighing such price and non-price parameters of competition in the balancing exercise in order to establish an overall assessment of the merger’s effects on businesses and consumers.
It is true that, in prior Commission decisions cited in the guidelines—including Ball/Rexam, Tata Steel/thyssenkrupp (later upheld by the General Court and the Court of Justice of the European Union (CJEU) on conventional horizontal-effects grounds), and Norsk Hydro/Alumetal—security of supply and sustainability appeared as factual elements within a standard competitive analysis. Customers valued reliable local production as a product characteristic; sustainability credentials shaped purchasing decisions. But the alleged harm was always reduced to familiar concerns, most often higher prices, fewer suppliers, or reduced output. These concepts fed into a standard significant impediment to effective competition (SIEC) assessment. They did not operate as independent grounds for intervention.
On a first reading, the draft guidelines appear to construct something qualitatively different. They place resilience and sustainability on par with price, quality, and innovation.
There are several other signals that corroborate this reading. Paragraph 55 defines market power to include the ability to reduce resilience or sustainability “below competitive levels,” elevating these concepts to the foundation of the analytical framework, not merely contextual factors.
Paragraph 23 lists harm to resilience and sustainability as bases for what reads like a standalone theory of harm. Paragraph 299 treats them as verifiable efficiencies capable of supporting approval. And Paragraph 342 subjects them to open-ended balancing at the Commission’s discretion, where they may be weighed against e.g., price, output, innovation, or quality.
In the Commission’s own words:
In its prospective analysis of concentrations, the Commission disposes of a margin of discretion and weighs up different, sometimes incommensurable price and nonprice parameters of competition.
The result is a doctrinal shift. Resilience and sustainability can now independently tip a merger decision toward prohibition or approval, without being translated into price or output effects. An alternative reading is that traditional competition concerns automatically dovetail with resilience and sustainability so that what is good for competition is good for resilience and sustainability. But if these references are merely obiter dicta, then why include them at all?
If my reading holds, the implications are significant. A merger could, in principle, be blocked because it reduces supply diversity—for example, by concentrating sourcing in a non-European supplier. Or it could be approved because it increases that diversity, e.g., by combining complementary European assets.
That is not simple codification. It is the construction of a new, standalone merger-control variable from concepts that prior case law treated as factual context. The Commission goes just far enough to claim it is codifying existing law, while taking an additional step that, so far as I can tell, no court has endorsed.
Innovation Shield for Some, Entrenchment for Others
We’ve covered the legal-interpretive move that lets the draft guidelines shift the law while claiming continuity. The shift runs in one direction: toward greater discretion. By expanding the universe of potential harms, the guidelines create a larger menu of interventions—and more room for selective, asymmetrical enforcement.
Consider the growing list of competition parameters: innovation competition, dynamic foreclosure, entrenchment, portfolio effects, resilience, sustainability, competitiveness. Each can operate as a standalone theory of harm or combine with others. Together, they give the European Commission enough analytical flexibility to reach almost any outcome while maintaining a veneer of neutrality.
The asymmetry becomes clear in the treatment of startup acquisitions.
The guidelines introduce an “innovation shield”—a safe harbor under which acquisitions of small, innovative firms presumptively do not raise competition concerns, provided market-share thresholds are met and enough independent R&D competitors remain. That is a genuine improvement. It reflects sound law & economics: credible exit options sustain upstream venture-capital investment, and overenforcement in innovation markets is costly.
But Paragraph 192 immediately narrows the shield. It excludes acquisitions by “the largest firm in the relevant market or a gatekeeper,” as defined by the Digital Markets Act. In practice, that means that the largest and most successful tech firms get no shield. They instead face a distinct theory of harm—entrenchment—with no equivalent safe harbor and a clear tilt toward false positives (i.e., making acquisitions harder).
The entrenchment theory (Paragraphs 252-256) sets a low bar. The Commission need only show that the acquirer is dominant in a “core market,” that the target operates in a “related” market—not necessarily horizontal or vertical—and that the target is “important to effectively compete.” There is no market-share floor or structural constraint. If the markets are “related” and the asset is “important,” entrenchment becomes plausible.
In digital ecosystems, that standard sweeps broadly. It can capture almost any acquisition by a large platform. And if the target were not “important,” why acquire it in the first place? Smaller acquirers, by contrast, can invoke the innovation shield for the same transaction.
That asymmetry creates a basic economic problem: scale is secular. The efficiencies from acquisition—cost reduction, integrated R&D, capital deployment, access to complementary pipelines—do not depend on the acquirer’s nationality, size, or regulatory status under the DMA.
Mario Draghi’s report identified Europe’s lack of scale as a central competitiveness problem. The guidelines seem to translate that into a different directive: permit scale when it benefits European firms, restrict it otherwise.
At points, the text says as much. Paragraph 13 states:
Mergers increasing the competitiveness of European industry, particularly in global markets, improving the conditions for growth and raising the standard of living in the Union are welcomed.
Other provisions reinforce the theme. Paragraph 15 outlines when scale-enhancing mergers may advance European competitiveness, but the categories are so broad and open-ended that they could justify almost any outcome in the name of “European competitiveness.”
It is far from clear that the Draghi report supports this reading. One could just as easily conclude the opposite. When a large U.S. technology firm acquires a European startup and integrates it into a global pipeline, that still generates scale. It still benefits European consumers. It still signals to venture-capital investors that exit options remain viable.
The counterfactual also does not hold up. Blocking a foreign acquisition does not mean a European buyer steps in or that the startup grows into a continental champion. Often, neither happens. The startup may fail to find a buyer at all, or it may settle for one with fewer resources and weaker integration capacity. In the worst case, it exits the market.
The guidelines’ asymmetrical treatment of acquirers does not guarantee more European scale. It risks the opposite: fewer viable exits, weaker venture-capital incentives, and a less dynamic European innovation ecosystem—the very outcome the Draghi agenda aims to avoid.
Industrial Policy in a White Glove
The expansion of competition parameters raises concerns that go beyond policy disagreement. As argued above, the guidelines equip the European Commission with a toolkit broad enough to approve European consolidation and block foreign acquisitions of European assets—while invoking the same analytical framework in both cases.
That, it seems, is how the Commission has read the Draghi report’s mandate.
The guidelines operationalize that approach. Theories layer thickly enough that almost any outcome becomes defensible. Resilience can sink a foreign deal; competitiveness can save a European one. The result is industrial policy in a “white glove” of technical neutrality—one that systematically advantages European acquirers while placing procedural and analytical hurdles in the path of foreign firms. Those firms appear less as contributors to European scale than as threats to European strategic autonomy.
Whether that is good policy is a fair question. I don’t think it is.
The harder question is whether it is legal. Again, I have my doubts.
The European Union Merger Regulation (EUMR) sets SIEC as a clear test. The CJEU has long drawn a line between competition analysis and broader public-interest considerations, reserving the latter for narrow, reviewable interventions—most notably, Article 21 of the EUMR, which allows Member States to invoke legitimate interests.
By recasting resilience and competitiveness as “dimensions of competition,” the Commission appears to fold policy goals it lacks authority to pursue under Article 2 of the EUMR into the competition analysis itself.
Several legal constraints come into view.
Article 2 of the EUMR limits the merger test to competition. Article 119 of the Treaty on the Functioning of the European Union (TFEU) commits the union to an open-market economy with free competition—a principle not easily satisfied by redefining competition to include its policy substitutes. Articles 63–66 of the TFEU guarantee the free movement of capital between Member States and third countries; restricting foreign acquisitions requires a clear legal basis that competition law does not obviously provide. And the Meroni doctrine bars EU institutions from expanding their mandate through interpretive discretion—though courts have read that constraint narrowly.
These are not trivial issues.
The Commission had other tools. Article 21 of the EUMR allows Member States to block mergers on legitimate-interest grounds, subject to proportionality and judicial review. Perhaps that route seemed too decentralized, too uneven, or too limited.
Instead, the Commission expanded the definition of competition and produced guidelines that—according to one senior antitrust partner quoted in Politico—are “a bit like the Bible: everybody can read anything into it.”
That is not a fringe critique. The Commission effectively acknowledges the point—and appears to embrace it. Paragraph 342 states that “the Commission disposes of a margin of discretion and weighs up different, sometimes incommensurable price and non-price parameters of competition.”
When parameters are incommensurable and discretion at the balancing stage is unconstrained, the guidelines do more than guide. They function as a delegation of power—one that allows the Commission to reach its preferred outcome, shielded from meaningful judicial review and justified by an ever-expanding set of “parameters” that stretch competition analysis beyond its legal and conceptual limits.
A Compromise That Doesn’t Cohere
There is a version of these guidelines that would deserve straightforward praise: one that genuinely codifies established case law, sharpens the efficiency framework, introduces a meaningful innovation safe harbor, and preserves the boundary between competition and other policy goals.
The draft does some of that. The theory-of-benefit framework improves the analysis. The innovation shield—scope problems aside—points in the right direction. The distinction between direct and dynamic efficiencies reflects modern industrial-organization thinking.
But the genuinely new elements pull the document elsewhere.
Observers of the Brussels policy scene will not be surprised. According to Politico, the guidelines reflect a compromise between European Commission President Ursula von der Leyen’s industrial-policy agenda and Executive Vice President Teresa Ribera’s defense of competition-law orthodoxy. The result tries to serve both—and commits fully to neither.
Where von der Leyen’s priorities prevail, the guidelines expand competition parameters, introduce asymmetrical theories of harm, and preserve a margin of discretion that makes the framework difficult to review. Where Ribera’s influence shows, the text gestures toward legal certainty, codification, and continuity with established case law.
Those two strands do not cohere. And when a framework embeds irreconcilable objectives, the side that preserves discretion usually wins in practice. Here, that is the industrial-policy side.
If the Commission wants to pursue industrial policy—steering which firms scale in Europe, limiting foreign acquisitions of European assets, favoring European consolidation—it has tools to do so. Article 21 of the EUMR. Sector-specific legislation. Foreign-investment screening with democratic accountability.
Redefining competition until it does all that work is not one of them.
Whether the courts will accept that move remains an open question. The harder truth is that the challenge is already written into the text.
