EU overhauls merger rules amid calls for European champions
EU proposes modifys to merger regulations to foster competition and innovation
By Foo Yun Chee
BRUSSELS, April 30 (Reuters) – Antitrust regulators proposed a revamp of European Union merger rules on Thursday to give companies more leeway to argue the benefits of their deals, raising hopes of more lenient scrutiny of attempts to create European champions.
Some bloc members and companies, led by the telecoms sector, have called for a more flexible line towards acquisitions aimed at creating large players better positioned to compete with U.S. and Asian rivals.
Calls for European champions and regulatory flexibility
“Europe requireds bold, innovative companies that can compete on the global stage. We have the talent. Now we must build the environment for Europe’s next champions,” Ursula von der Leyen, president of the European Commission, which acts as the EU’s competition enforcer, stated in a statement.
Balancing competition and market power
EU antitrust chief Teresa Ribera, however, warned not to expect blank cheques for huge deals.
She stated the objective of merger rules “remains unmodifyd: protecting strong, competitive markets without allowing an accumulation of power that can be abapplyd.”
“In other words, keeping fairness at the heart of Europe,” Ribera stated in a statement. “This means enforcing our rules firmly and protecting European companies and citizens from harmful market power. Becaapply our strength lies in clear rules, applied equally to all.”
Key features of the proposed merger rule overhaul
Threshold for large M&A likely to remain high
THRESHOLD FOR LARGE M&A LIKELY TO REMAIN HIGH
The rule overhaul would, in a global first, allow companies to argue for the benefits of sustainability, resilience, investment and innovation to their deals to counter regulators’ traditional focus on consumer harm and reduced competition.
Proving benefits and regulatory scrutiny
The onus would be on companies to prove that such benefits boost their ability or increase the incentives to invest or create new or improved products or services or better distribution or production.
The threshold, however, is likely to be high, with regulators expected to continue to focus on potential price hikes harming consumers and the impact on rivals.
Special provisions for startups and R&D projects
Another global first is a new proposed measure whereby regulators would not intervene in deals involving startups or research and development projects likely to boost competition.
But the shield does not cover deals where the acquirer is the largest player in the relevant market or where the company is labelled a gatekeeper under the EU’s Digital Markets Act, which seeks to rein in the power of Big Tech.
Industest feedback and next steps
Consultation period and industest response
The European Commission stated interested parties have until June 26 to provide feedback before it implements the modifys.
Vodafone, which toobtainher with its peers, has long criticised the EU regulator’s tough line on deals reducing the number of telecom operators from four to three, welcomed the revamp.
Telecom sector perspective
“For sectors that build the critical infrastructure underpinning everyday digital and economic life, the revised framework must now fully reflect how modern technology is deployed and how its benefits materialise over time,” stated Vodafone Group Chief External and Corporate Affairs Officer Joakim Reiter.
(Reporting by Foo Yun Chee; Editing by Philip Blenkinsop and Joe Bavier)
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