EU Overhauls Merger Rules to Encourage Champions and Innovation in Europe
By Foo Yun Chee
European Commission Proposes Revamp of Merger Rules
BRUSSELS, April 30 (Reuters) - EU antitrust regulators proposed on Thursday a revamp of European Union merger rules to give companies more leeway to argue for the benefits of their deals, raising expectations of easier scrutiny of attempts to create European champions, which are in reality unlikely to be met.
Background: Calls for Flexible Competition Policy
The move by the European Commission, which acts as the EU competition enforcer, came after some EU countries and some companies, led by the telecoms sector, called for a more flexible line towards acquisitions aimed at creating European champions to better compete with U.S. and Asian rivals.
Key Changes in the Overhaul
Recognition of Broader Deal Benefits
The rule overhaul would for the first time and 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.
Burden of Proof on Companies
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 improved distribution or production.
Regulatory Thresholds Remain High
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.
Innovation Shield for Startups and R&D
Another global first is the introduction of a so-called innovation whereby regulators will not intervene in deals involving startups or research and development projects likely to boost competition.
Limitations of the Innovation Shield
The shield however 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 Digital Markets Act, which seeks to rein in the power of Big Tech.
Next Steps and Feedback Process
The European Commission, which acts as the EU competition enforcer, said interested parties have until June 26 to provide feedback before it implements the changes.
(Reporting by Foo Yun Chee; editing by Philip Blenkinsop)
