From Present Practice to Future Policy: The Evolution of Efficiencies in Merger Control

I. Introduction

Recent discussions on competition policy seem to have centered on whether competition authorities have adequate and appropriate tools to enforce laws effectively, often extending to whether they should be granted broader powers or a wider policy scope. Different aspects of merger review have been under scrutiny and efficiencies have not been the exception. As there is growing advocacy for expanding the objectives of merger control beyond competition, efficiencies analysis is often perceived as a key avenue.

In June 2025, efficiencies as a defense or rebuttal in merger control came back to the OECD’s Competition Committee agenda. A roundtable among enforcers presented a comprehensive overview of how competition authorities and courts are currently assessing efficiencies when reviewing a merger and the challenges they face. The roundtable looked at the past and debated on some ideas for the future of efficiencies’ analysis in merger review. During the next OECD Competition Open Day in 2026, one session will be dedicated to a forward-looking view of merger efficiencies.

This article discusses some key points of the debate, many of which are addressed in the OECD’s background paper that supported the discussion.[2] It first reviews what the current economic theory and practice says about efficiencies and then discusses what should we expect in the future. It concludes that there are many areas of convergence in the way that competition authorities assess efficiency claims in merger reviews, while aspects such as the possibility to consider out-of-market efficiencies or the extent of their pass-through to consumers remain under discussion. The article also highlights some arguments that may explain the rarity of successful efficiency defenses, including challenges in measuring them.

Looking ahead, the article stresses the existence of different alternatives for competition authorities to consider a broader set of efficiencies, many of which already exist in the legal frameworks, and suggests cautious approaches to proposals for relaxing authorities’ standards for reviewing efficiencies.

II. State of Play

OECD jurisdictions share many criteria for assessing efficiencies, while some aspects remain specific to their legal frameworks and practice. This is reflected in the OECD Recommendation of the Council on Merger Review, amended in June 2025, which recommends competition authorities to evaluate substantiated claims by the merging parties for procompetitive efficiencies, considering “whether they are merger-specific, likely, timely, verifiable, and offset the harm to competition.”[3] The overarching goal of efficiency claims’ analysis in OECD jurisdictions appears to be the same. The goal is to be able to determine whether mergers that may be anticompetitive also bring benefits to the markets that offset the competitive harm.

Competition authorities generally recognize the relevance of productive and dynamic efficiencies, provided that such efficiencies do not arise from an increase in market power or constitute mere financial gains, such as tax savings.[4] There is also broad agreement that certain types of efficiencies, such as those leading to reductions in variable costs, are more likely to be considered in competitive assessments than others, like those associated with fixed cost reductions.[5] This preference relates to verifiability, as the former could more easily be related to prices.[6]

In most jurisdictions, the burden of proof or production of evidence lies with the merging parties. The main argument for this is that parties to the merger have better access to information and are most able to produce and interpret the facts relevant to an efficiency claim. After all, if efficiencies are put forward by the parties, it means that they should be able to prove them.

Some of the criteria used to evaluate the validity of efficiency claims also appear to be consistently applied across jurisdictions. Efficiencies should be specific to the merger, likely and verifiable. While verifiability may look different across jurisdictions, or even on a case-by-case basis within a jurisdiction, the principle is the same: efficiencies should not simply be speculations or vague claims but likely to materialize, timely and sufficient.

The most common aspects reviewed for verifiability of an efficiency are likeliness, timeliness and sufficiency. With respect to likeliness, requirements from competition authorities go from detailed qualitative assessments supported with internal documents to replicable and robust quantifications, in cases where those can be provided. It is common practice to require that independent experts be able to verify efficiency claims by analyzing the same information provided by the parties to support those claims. Experts suggest focusing on conservative estimates of those efficiencies that are most likely to occur and that can be supported by qualitative evidence such as documents created in the ordinary course of business.[7] Similarly, merger guidelines in different jurisdictions, including the horizontal merger guidelines from the European Commission, present internal documents (less weight is given to those created specifically for the transaction), historical data and efficiencies materialized from past transactions as the most relevant evidence.  During the OECD roundtable, many jurisdictions also stressed the value of public consultations, engagement with third parties and, particularly co-operation with regulators.[8]

Similarly, many authorities agree that the later the efficiencies are expected to materialize, the less weight they are assigned, with some jurisdictions like Brazil setting specific timeframes to consider efficiencies timely.[9] This has faced some criticism as dynamic efficiencies tend to be more relevant in the long term and calls for more flexibility have been raised by the private sector.[10]

The recent Vodafone/Three merger, cleared by the Competition and Markets Authority (CMA) in the United Kingdom[11] is an interesting example on how authorities could deal with longer-term efficiencies.[12] As the authority gave a green light to investment-led efficiencies that would fully occur after eight years, it imposed behavioral remedies to guarantee commitment to the investment plan and blind consumers to be negatively impacted in the short run.[13]

Other aspects of efficiencies’ review reflect more variation across jurisdictions. One area is the moment in which the efficiency claims are considered by the authorities in their process of reviewing a merger. While jurisdictions with an administrative regime tend to consider efficiencies within the overall assessment of the effects of the merger, prosecutorial ones usually consider them in a staged approach where the merger is first determined to be anticompetitive and then, efficiencies could be considered as a rebuttal.

The OECD note presents some information on the efficiency defense in the United States, which follows a staged approach, drawing attention to how the efficiency rebuttal is used to counter the specific claims of anticompetitive effects instead of being a general claim of procompetitive justifications.[14]

Another key area where there is variation is whether pass-on to consumers is required. Depending on the welfare standard followed, some level of pass-through is required and considerations on which group of customers should be benefit may also differ. In consumer-welfare standard regimes, efficiencies should be passed on to final consumers, usually in the same relevant market where the anticompetitive effects take place. Under other standards, pass-on to consumers is less relevant, with alternatives such as pass-on to a broader set of agents or more generally, to the economy.

In terms of outcome, efficiency claims analysis in different jurisdictions also aligns. Overall, the criteria seem difficult to be met and claims rarely play a decisive role in merger decisions. The cases when they do are concentrated in a small number of jurisdictions, while the majority have no precedent of efficiency claims influencing the outcome of the authority’s review.

Practical issues go from difficulties in quantifying the efficiencies, particularly arising from uncertainty of innovation outcomes and difficulties establishing causation for long-term benefits, to identifying whether other alternatives available are likely and timely, for determining merger specificity of the efficiency claimed.

The rarity of successful efficiency defenses, however, does not necessarily mean that authorities are not doing their job well. On the contrary, it can be attributed to a number of reasons that suggest that the status quo should be maintained.

First, the sample of mergers in which efficiency claims can determine the outcome of the review is small. According to the OECD CompStats survey, more than 93 percent of the mergers reviewed by competition authorities are cleared (or not challenged) each year.[15] While these clearances are the result of authorities not finding a significant lessening on competition arising from the merger, implicitly, some of them also acknowledge the benefits of the transactions. However, they do not imply an assessment of said benefits by neither the parties nor the competition authority or courts. Simultaneously, this means that only in less than 7 percent of the merger reviewed, the analysis of its effects would reach a point in which efficiencies as a defense or a rebuttal are explicitly considered.

Second, academic literature generally casts doubt on the dimension and realization of claimed efficiencies, mostly on mergers happening in highly concentrated markets. Meta-studies, retrospective examination of mergers, ex-post assessments and econometric models looking at changes in productivity, have found little to no evidence of efficiencies materializing, particularly in the size that they were claimed would happen, and consistently passed on to consumers.[16]

Third, competition authorities and courts tend to approach efficiency claims in mergers cautiously, especially in highly concentrated markets where the potential for anticompetitive effects is significant. Due to the predictive nature of efficiency assessments and the risk of approving harmful mergers (Type II errors), authorities demand a high level of certainty and often adopt a conservative stance. Together with the high standards of proof, Merger guidelines rarely offer clear examples of accepted efficiencies, instead highlighting rejected claims, which reinforces the perception of predisposition among merging parties. Moreover, courts and agencies in jurisdictions like the EU and the U.S. have emphasized that efficiencies rarely justify mergers that lead to monopoly or near-monopoly situations.[17] Limited resources and the complexity of evaluating efficiency trade-offs may further discourage authorities from examining such claims unless they are exceptionally well-substantiated and structurally impactful.

Finally, proper substantiation is also relevant for the rarity of efficiency claims succeeding. While efficiency claims are raised in most merger notifications, merging parties often fail to provide the detailed evidence required to support such claims. Without strong substantiation, authorities can easily dismiss efficiency arguments. Reasons why efficiencies are raised with insufficient substantiation include practical challenges in their quantification, but also risks of implying anticompetitive intent, strategic choices and confidentiality issues.

III. Looking Ahead: Prospects and Possibilities

The factors outlined above appear to sufficiently explain the limited number of decisions in which efficiencies have influenced the authority’s decision on a merger. However, there seems to be an open debate on whether competition authorities should change their standards and be more flexible in the evaluation of efficiency claims, and on whether they should consider a broader set of efficiencies, going beyond competition-only objectives.

Canada’s most recent amendments to the merger regime appear to be the answer to the first question. Before the most recent amendments to the Competition Act, the Act included an efficiency exception, whereby a merger that was otherwise found anti-competitive could be permitted to proceed if it was likely to bring about gains in efficiency that would be greater than and offset the anti-competitive effects.[18] In practical terms, this provision implied that the Competition Tribunal had to conduct a trade-off analysis, weighing anticompetitive effects presented by the Competition Bureau against efficiencies claimed by the parties. Over time, the defense was increasingly present in litigated cases and made the challenges more complex and burdensome for the Competition Bureau. The Competition Bureau faced significant difficulties to meet its legal burden and successfully challenge anticompetitive mergers, while markets substantially consolidated in the country, without evidence that this was translated in companies being more competitive in international markets.[19] In 2023, the Act was amended and the efficiency exception repealed. Other provisions still allow for the consideration of efficiencies within factors relevant to competition.

The Canadian experience, which could be considered as a unique natural experiment, suggests that increasing the burden for the authority do not facilitate the assessment of efficiencies and that adopting a more flexible approach may risk the approval of more anticompetitive mergers.

With respect to the second question, the current debate centers on recent proposals to broaden the scope of efficiencies to include public interest considerations and other economic objectives, such as industrial and trade policies. The Draghi Report on the future of European competitiveness is the clearest example.[20] It claims that competition policy should support the new industrial deal and that allowing for an “innovation defense” to justify mergers is one of the paths to do so.

The Draghi Report advocates shifting from a backward-looking focus on market shares to a forward-looking approach that emphasizes potential competition and innovation. In practical terms, this does not necessarily involve adjustments on legal frameworks, but giving greater weight to dynamic efficiencies, potentially including out-of-market efficiencies or other benefits impacting policies beyond competition.

The OECD note presents multiple examples of how jurisdictions take into account non-competition goals, public interests and broader policies in merger review, according to their legal frameworks.[21] In some cases, these broader goals are considered within the assessment of effects,[22] in others within the balancing of harm and benefits[23] and, in others, the assessment is completely separate from competition aspects.[24] Particularly in the analysis of efficiencies, some authorities have made room for broader policy objectives or interests within their acknowledgement of out-of-market efficiencies. There are cases where other regulators can review mergers and decide on them separately from the competition authority’s decision, as it is the case in France and Germany.

These examples demonstrate that the underlying ideas prompting the debate are not entirely new, and that some authorities are, at least on paper, receptive to a sufficiently broad range of efficiencies. The remaining question, then, is whether a shift in attitude toward efficiencies is warranted.

Looking ahead, we can expect a more structured and transparent approach to efficiency analysis.  Advances in data analytics and economic modelling may help authorities better assess the credibility of efficiency claims. Moreover, competition authorities increasingly recognize the need to balance, for certain transactions, potential anti-competitive effects with pro-competitive efficiencies, especially in dynamic and innovation-driven markets. Both things together could already shift the balance in favor of seeing more analysis of efficiencies, even without an explicit change in attitude.

IV. Conclusions

In sum, while calls for greater flexibility in assessing efficiencies and broader public interests continue to gain traction, authorities appear to be conservative in compromising the verifiability of the claims and reducing effectiveness of merger control. For authorities, the added complexity and possible political sensitivities risk undermining economically grounded competition-focused decisions. Whether the future lies in adapting merger control frameworks or in demanding more rigorous evidence from merging parties remains uncertain — but any shift must carefully weigh the trade-offs between flexibility and enforceability.

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[1] Competition Expert, OECD Competition Division. Any opinions expressed or arguments made in this article are personal and do not necessarily reflect the official views of the OECD or of its Member Countries.

[2] OECD (2025), “Efficiencies in merger control,” OECD Roundtables on Competition Policy Papers, No. 321, OECD Publishing, Paris, https://doi.org/10.1787/f4ce548f-en.

[3] OECD Recommendation on Merger Review, Amended in 2025, available at: https://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0333.

[4] Normally, these considerations are contained in merger guidelines rather than laws and regulations. See, for example, European Commission (2004), Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings, available at: https://eurlex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A52004XC0205%2802%29.

[5] This is the case in most merger guidelines in Europe, including those of the European Commission.

[6] Nilausen, L. (2023), “Lessons from the life and death of merger efficiency claims: Merger

rationales v merger efficiencies,” Compass Lexecon Insights, available at: https://www.compasslexecon.com/insights/publications/lessons-from-the-life-and-death-of-merger-efficiency-claims-merger-rationales-v-merger-efficiencies.

[7] Shencoop, E. & N. Harris (2019), “Using Efficiencies to Defend Mergers: The Current Legal Landscape,” The Antitrust Source.

[8] Contributions from the jurisdictions to the roundtable are available at: https://www.oecd.org/en/events/2025/06/efficiencies-in-merger-control.html.

[9] According to CADE’s merger guidelines, the authority requires that the efficiencies materialise in less than two years. CADE (2016), Guia para Análise de Atos de Concentração Horizontal, https://cdn.cade.gov.br/Portal/centrais-de-conteudo/publicacoes/guias-do-cade/guia-para-analise-de-atos-de-concentracao-horizontal.pdf.

[10] See OECD (2025), Efficiencies in Merger Control – Note by Business at OECD (BIAC). Available at:  https://one.oecd.org/document/DAF/COMP/WP3/WD(2025)20/en/pdf.

[11] CMA (2025), Vodafone / CK Hutchison JV merger inquiry page, https://www.gov.uk/cma-cases/vodafone-slash-ck-hutchison-jv-merger-inquiry.

[12]  This decision is also proof of how efficiencies can be informative for the design of merger remedies. i.e. Remedies can be structured to ensure that claimed efficiencies are realised, if there is a concern on the companies’ incentives to implement them.

[13] CMA (2025), Press release: CMA clears Vodafone / Three merger, subject to legally binding commitments, available at: https://www.gov.uk/government/news/cma-clears-vodafone-three-merger-subject-to-legally-binding-commitments.

[14] Box 1 in OECD (2025), “Efficiencies in merger control,” OECD Roundtables on Competition Policy Papers, No. 321, OECD Publishing, Paris, https://doi.org/10.1787/f4ce548f-en.

[15] OECD (2025), OECD Competition Trends 2025, OECD Publishing, Paris, https://doi.org/10.1787/8c4bd00b-en.

[16] A group of academic articles compile empirical work and summarise their findings. For example, Kwoka, J. (2015), Mergers, Merger Control, and Remedies: A Retrospective Analysis of U.S. Policy, MIT Press, https://www.jstor.org/stable/j.ctt17kk9tb; Rose, N. & J. Sallet (2020), “The Dichotomous Treatment of Efficiencies in Horizontal Mergers: Too Much? Too Little? Getting it Right,” University of Pennsylvania Law Review, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3639184; and Asker, J. & V. Nocke (2021), “Collusion, Mergers, and Related Antitrust Issues,” NBER Working Paper Series, Vol. 29175, http://www.nber.org/papers/w29175.

[17] This is explicitly acknowledged in the EC Guidelines on the assessment of horizontal mergers and confirmed by the General Court in the Ryanair/Air Lingus merger (Case T-342/07, Ryanair v. Commission, 2010, E.C.R.). In the United States, this has also been stated at least in the last three versions of the Merger Guidelines and supported by Court decisions, such as FTC v. H.J. Heinz Co., 246 F.3d 708, 720 (D.C. Cir. 2001) and FTC v. Univ. Health, Inc., 938 F.2d 1206, 1222 (11th Cir. 1991). Particularly, the 2023 US Merger Guidelines state that: “Cognizable efficiencies that would not prevent the creation of a monopoly cannot justify a merger that may tend to create a monopoly.”

[18] Section 96 of the Competition Act in Canada.

[19] Competition Bureau: Guide to the December 2023 amendments to the Competition Act, https://competition-bureau.canada.ca/en/how-we-foster-competition/education-and-outreach/guide-december-2023-amendments-competition-act#sec02.

[20] Draghi, M. (2024), The future of European competitiveness Part A | A competitiveness strategy for Europe, https://commission.europa.eu/document/download/97e481fd-2dc3-412d-be4c-f152a8232961_en.

[21] See, for example, Box 11 of the Note that illustrates ways in which authorities assess environmental efficiencies in mergers.

[22] Like in the United Kingdom, where the CMA may consider relevant customer benefits when considering whether to refer a merger to a phase-2 investigation. These benefits do not necessarily need to affect rivalry in the relevant market where a significant lessening of competition is identified.

[23] As is the case in Austria and Spain.

[24] E.g. Australia, New Zealand, and South Africa.