EU Eyes Major Merger Rule Overhaul to Compete with US and China

Under draft guidelines reviewed by the Financial Times, the European Commission intends to place greater emphasis on factors such as innovation, investment, and the resilience of the internal market when assessing corporate mergers. According to The Financial Times, this would represent a notable departure from the long-standing focus on consumer impact that has guided merger decisions since the early 2000s.

The proposed changes are still under discussion but have already generated considerable attention among investors and dealmakers anticipating a more permissive environment for consolidation. Per The Financial Times, the reforms would broaden the criteria used to determine whether mergers are acceptable, potentially enabling larger European companies to emerge.

The shift reflects a growing political consensus across Europe that stronger domestic corporations are necessary to compete with major players in the United States and China. Teresa Ribera, the EU’s competition chief, said the new approach would encourage “pro-competitive mergers that allow European players to grow and accelerate innovation and have the scale to be relevant players,” adding that Europe must “develop a firm defence against external chaos.”

The push for reform comes in the wake of multiple crises that have exposed vulnerabilities in Europe’s economy. According to The Financial Times, disruptions such as the energy shock following Russia’s full-scale invasion of Ukraine and tensions linked to the Iran war have underscored the need for greater economic resilience and growth capacity within the bloc.

Industry leaders have long argued that existing EU merger rules hinder the formation of companies large enough to compete on a global scale. A frequently cited example is the European Commission’s 2019 decision to block the merger between Siemens and Alstom, which was seen by critics as preventing the creation of a European competitor to China’s CRRC.

“The guidelines are a break from the past,” one EU official told the Financial Times, describing them as “an ambitious approach that reflects the realities of increasingly challenging global competition.” The official added that the proposals align with “the priorities of this Commission mandate — ambition and scale.”

European Commission President Ursula von der Leyen has also advocated for a revised competition framework that better supports companies seeking to expand internationally. Per The Financial Times, she has called for a “new approach” that enables European businesses to scale up more effectively in global markets.

However, the initiative has encountered resistance from some member states and officials who remain concerned about the potential downsides of loosening merger controls. Critics argue that reduced oversight could stifle innovation, limit competition, and lead to higher prices for consumers.

Despite these concerns, the draft guidelines maintain that preserving effective competition remains a core objective. At the same time, they acknowledge that the growth and scaling of firms to compete globally “can be pro-competitive” and may have a “positive impact” on the European economy, according to The Financial Times.

If adopted, the new framework would signal a fundamental shift in how Europe balances competition policy with industrial strategy, potentially reshaping the continent’s corporate landscape for years to come.

Source: The Financial Times