The European Commission has proposed an overhaul of EU merger rules that would expand the types of benefits companies can use to defend transactions, Reuters reported. For the first time in a global regulatory context, companies would be able to argue that mergers offer benefits tied to sustainability, resilience, investment, and innovation, moving beyond the traditional focus on consumer harm and reduced competition.
The proposal follows criticism from some EU member states and companies, particularly in the telecom sector, that current merger rules have limited consolidation needed to build European companies capable of competing with U.S. and Asian rivals. Still, the threshold for approval is expected to remain high. Merging parties would bear the burden of proving that these broader benefits increase incentives to invest, support new or improved products and services, or improve production and distribution.
The overhaul would also introduce an “innovation shield” for deals involving startups or research and development projects likely to boost competition. That protection would not apply when the acquirer is the largest player in the relevant market or has been designated a gatekeeper under the Digital Markets Act, preserving heightened scrutiny for major technology platforms.
The Commission is seeking stakeholder feedback through June 26, 2026, before implementing the changes. While the proposal offers companies more room to frame strategic benefits in merger reviews, Reuters noted that regulators are still expected to focus on potential price increases and harm to rivals.
