Draft EU Merger Guidelines - Formalising A Decade Of Enforcement Practice

On 30 April 2026, the European Commission (“Commission”) launched a public consultation on its draft revised Merger Guidelines (“Draft Guidelines”), seeking to codify and consolidate developments in its merger control practice over the past decade. The intention is that the Draft Guidelines, once finalised and adopted, will replace the existing horizontal and non-horizontal merger guidelines (“Current Guidelines”) and introduce a single, integrated framework that reflects what the Commission claims is its increasingly broad and forward-looking approach to merger assessment.

While the fundamental legal tests and standards to be applied in the assessment of mergers would remain unchanged, the way in which mergers will be assessed is evolving. For dealmakers, the Commission wants to send a message that it intends to scrutinise mergers through a "wider lens", with greater focus on factors such as innovation, resilience, ecosystems, investment incentives, strategic positioning and long-term competitive dynamics — while also giving itself a more structured framework to recognise efficiencies and scale benefits where properly evidenced. For merging parties, the draft also opens the door to a more proactive efficiencies strategy: efficiencies are no longer treated only as a potential “defence” to outweigh or offset potential competitive harm identified by the Commission, instead they are elevated to a free-standing "theory of benefit" to be developed in parallel with the Commission’s analysis.

Context

The Draft Guidelines arrive against the backdrop of a broader EU-wide debate about competitiveness, scale and industrial policy — including the recommendations of the Draghi Report, which called for an overhaul of the EU’s approach to regulation, to encourage the growth of stronger European companies capable of competing globally. The Report highlighted the importance of innovation, investment and resilient supply chains in achieving those aims and emphasises the significant role played by EU competition policy in achieving more competitive markets. It concluded that the effectiveness of competition policy had so far been hindered by overly narrow application of the rules and the failure to adapt to profound changes in the global economy. The Draft Guidelines represent a significant part of the Commission’s response to Draghi and the broader debate on European competitiveness and economic resilience, forming part of a broader push to lighten up on regulation overall and avoid an overly interventionist stance that could be seen as chilling investment or innovation. 

Ultimately, though, the Draft Guidelines do not signal a major shift in enforcement. There is no proposed relaxation of the rules to respond to political pressure to facilitate the emergence of “European champions”. The Commission repeatedly stresses in materials around the Draft Guidelines that mergers giving rise to a significant impediment to effective competition (“SIEC”) — the relevant legal standard under the EU Merger Regulation — must still be prohibited or remedied. Rather than rewriting the rules, the draft largely formalises and consolidates trends already visible in recent enforcement practice — while modernising the analytical framework for increasingly innovation-driven and strategically sensitive markets and potentially providing greater opportunities for merging parties to demonstrate where efficiencies arising from their transaction may outweigh competitive harm.

From theories of harm to theories of benefit

One of the headline changes in the Draft Guidelines is the Commission’s move towards a more formally structured analytical framework. They codify the “more likely than not” standard for the Commission’s overall SIEC assessment, while clarifying that this standard applies to the ultimate conclusion rather than each individual piece of evidence or constituent fact. In practice, this confirms that the Commission may assess transactions holistically and reach an overall finding based on the totality of the evidence, even where individual arguments or evidentiary strands put forward by the parties are not independently persuasive. 

For the first time, the Draft Guidelines expressly allocate the burden of proof: the Commission must demonstrate anticompetitive harm, while merging parties must substantiate efficiencies and other procompetitive effects. In that context, the Commission is expected to articulate a “theory of harm”, while merging parties are expected to put forward a corresponding “theory of benefit” explaining how the transaction will generate procompetitive outcomes. While efficiencies have long been recognised in principle, they have rarely played a decisive role in practice — although the Commission has accepted efficiencies arguments as relevant supporting factors in cases some cases, e.g. M.6570 – UPS/TNT Express in relation to network efficiencies and cost synergies. The proposed new framework gives efficiencies greater visibility and structure, including by (i) formally distinguishing ‘direct’ from ‘dynamic’ efficiencies and (ii) explicitly recognizing ‘out-of-market’ and ‘collective benefits’ — i.e., allowing efficiencies in related markets or accruing to society more broadly to count towards the assessment, provided harmed consumers substantially overlap with the beneficiaries.

The Draft Guidelines explicitly acknowledge dynamic efficiencies in noting that mergers may:

• enable scale necessary for global competition;
• improve innovation capacity;
• strengthen resilience and access to critical inputs; and
• generate long-term, non-price benefits.

Importantly, the Draft Guidelines provide much more detailed guidance on how such benefits will be assessed, significantly more than under the Current Guidelines.

However, the underlying legal standard remains demanding: benefits must be verifiable, merger-specific and passed on to consumers. In practice, this means that merging parties will need to build robust, evidence-based narratives early in the process. While the Draft Guidelines are unlikely to produce a sudden increase in successful efficiencies defences, their significance lies more in giving parties a clearer framework that should allow companies to better anticipate the Commission’s assessment and more effectively structure their arguments. The Draft Guidelines also seek to remove the perceived disincentive to engaging early on efficiencies by confirming that a preliminary finding of harm is not a precondition to raising efficiencies arguments and by expressly encouraging early engagement with the Commission. The Commission has also signalled that the early presentation of efficiencies arguments should not in itself be interpreted as indicative of competition concerns. At the same time, robust, evidence-based narratives will remain critical to advancing a successful efficiencies case.

Innovation takes centre stage

The Draft Guidelines codify the Commission’s increasingly expansive approach to innovation and dynamic competition, already visible in recent decisional practice (e.g., M.7932 – Dow/DuPont, M.8084 – Bayer/Monsanto and M.11177 – Pfizer/Seagen).

On the one hand, the introduction of an ‘innovation shield’ provides greater clarity for transactions involving start-ups and small innovators, suggesting that such deals are unlikely to raise concerns absent credible evidence of future competitive significance. The innovation shield introduces a structured safe harbour under which the Commission will, in principle, not find an SIEC where a transaction falls within one of the defined thresholds which vary depending on the type of overlap involved. For example, different thresholds apply to overlaps between R&D capabilities, overlaps between pipeline products and existing products, and upstream or downstream relationships. In the case of acquisitions of start-ups, the safe harbour may still apply even where those thresholds are exceeded, provided that the acquirer is neither the largest player in the relevant market nor a DMA gatekeeper (i.e., a large digital platform designated under the EU Digital Markets Act). In practice, much will depend on how the Commission defines the relevant “innovation space”, which is likely to be a key area of debate in early cases, as well as how broadly the Commission interprets its discretion to depart from the safe harbour in specific circumstances.

On the other hand, the Commission formalises its intervention framework where mergers:

• eliminate potential competitors;
• reduce innovation;
• strengthen ecosystems or data advantages; or
• create long-term foreclosure risks.

This twin-track approach brings into focus the Commission’s increasing emphasis on future competitive dynamics, which has already featured prominently in its recent decisional practice (e.g., M.7932 – Dow/DuPont, M.8084 – Bayer/Monsanto and M.10615 – Booking/eTraveli). What is genuinely new is the introduction of an explicit and structured safe harbour for qualifying R&D-stage transactions (i.e., the “innovation shield”), which for the first time translates the Commission's case-driven innovation analysis into defined quantitative parameters potentially operating in the parties’ favour.

An expanded enforcement toolkit

The Draft Guidelines appear intended to provide a major shake-up of the Commission’s merger control toolkit — the analytical frameworks, theories of harm and evidentiary tools used to assess transactions — consolidating a range of theories of harm that have emerged incrementally through recent decisional practice. These include factors such as:

• labour market effects, including potential monopsony power;
• portfolio and ecosystem effects, enhancing bargaining power;
• access to commercially sensitive information;
• common ownership and minority shareholdings (a comparatively novel standalone theory of harm);
• dynamic foreclosure strategies, focused on long-term exclusionary incentives; and
• data, network and platform-related competitive advantages.

The Draft Guidelines also indicate that innovation and dynamic competition are intended to be put at the centre of substantive merger analyses; the draft contains new, standalone sections which provide more insight on where the Commission may see harmful effects in relation to:

• loss of investment and expansion competition;
• specific and general innovation competition;
• “killer” and “reverse killer” acquisitions; and
• future innovation capabilities and incentives. 

For innovative or fast-growing businesses, this is likely to make innovation and future competitive dynamics a more central and structured part of merger review, even where current overlaps are limited.

At the same time, ecosystem and entrenchment concerns are elevated significantly. In this context, “ecosystems” refers broadly to interconnected products, services or platforms that reinforce one another and can increase customer dependency or barriers to switching. A new standalone theory of harm — “entrenchment of a dominant position” — targets acquisitions by firms with strong platform or ecosystem positions where the transaction could reinforce barriers to entry or deepen customer dependency within an ecosystem.

Most of these concepts are codifications of existing decisional practice rather than analytical innovations. Some features, however, are genuinely novel, including:

1. abandoning the traditional horizontal/non-horizontal silo in favour of eight standalone theories of harm applicable to all merger types;¹
2. common ownership as a standalone theory of harm;
3. the "diagonal merger" concept (neither horizontal nor vertical, capturing acquisitions of assets or customer bases on which rivals of the other party rely), with reduced scope for efficiency defences;
4. loss of investment competition as a distinct theory of harm, capturing capital-intensive sectors (telecoms, energy, transport) where firms compete through capacity and infrastructure investments rather than R&D; and
5. the introduction of "pivotal capacity" as a quantitative tool in capacity-constrained markets (measuring the share of demand that cannot be met without a given firm's capacity, particularly relevant in electricity and gas).

Practical implications of the current drafting

For dealmakers, for companies looking at joint venture projects, even for parties gearing up to engage in minority acquisitions, the Draft Guidelines are going to have an impact. The substantive legal standards — the SIEC test, the cumulative criteria for efficiencies, and the frameworks for foreclosure, innovation and potential competition — remain broadly consistent with the Commission’s Phase II decisional practice over the past two decades. What changes is the structure and transparency of the Commission’s analytical framework, together with the expectations placed on parties during the review process. In practice, this is likely to require companies to engage earlier on issues such as innovation, efficiencies, resilience and dynamic competition, supported by more developed economic evidence, internal documentation and forward-looking strategic narratives. At the same time, the Draft Guidelines provide sophisticated companies with a clearer framework for anticipating potential concerns and proactively structuring arguments in support of clearance.

From a deal-planning perspective, the Draft Guidelines’ new eight-pillar structure means that a broader spectrum of theories of harm is likely to surface in pre-notification discussion, and risk assessments will need to extend beyond traditional horizontal overlaps to capture innovation, ecosystems, data, labour and long-term dynamic effects, including the impact of a transaction on rivals’ ability to scale.

In terms of opportunities, the Draft Guidelines contain several features that well-prepared parties should seek to leverage proactively. Particularly notable is the Draft Guidelines’ express invitation to parties to articulate a "theory of benefit" — a structured, evidence-based narrative explaining how a transaction maintains or enhances effective competition, to consumers' benefit. This is significant not so much because it lowers the threshold of the legal test for accepting efficiencies arguments, but more because it could give parties a clearer framework for presenting procompetitive arguments early in the merger review process (rather than treating efficiencies as a reactive defence raised only after concerns emerge). 

Parties may also seek to rely on the new distinction between "direct" and "dynamic" efficiencies, which creates room for investment- and innovation-based arguments; the "innovation shield" as a defensive avenue in mergers involving overlapping R&D; and the recognition of out-of-market and collective benefits, particularly in areas linked to resilience, sustainability and long-term investment. Across all of these, the Draft Guidelines reinforce the importance of early and substantive engagement with DG COMP —supported by robust economic analysis and contemporaneous internal documents aligned with the parties’ strategic narrative.

Looking ahead, the public consultation on the Draft Guidelines runs until 26 June 2026, with further stakeholder engagement expected, including a dedicated workshop on 10 June 2026. While aspects of the drafting and emphasis may evolve through the consultation process, the broad direction of travel — towards a more structured, forward-looking and innovation-focused framework — is unlikely to change materially. Final adoption is anticipated by the end of 2026, or early 2027.

Mounir Younes, a legal intern at Baker Botts, assisted in the preparation of this article.

Footnote

1. The eight pillars are: (i) loss of head-to-head, (ii) loss of investment and expansion competition, (iii) loss of innovation competition, (iv) loss of potential competition, (v) foreclosure (vi) entrenchment of a dominant position, (vii) coordination, and (viii) 'other' anticompetitive effects (portfolio effects and access to rivals' commercially sensitive information)