EU merger guidelines rewrite still leaves efficiencies harder to prove than harm

The European Commission has never, in the two decades since the EU Merger Regulation took effect, approved a concentration on the grounds that efficiencies outweighed a significant impediment to effective competition. Not once. That zero is the starkest evidence that the current framework treats efficiency claims as a procedural afterthought rather than a substantive counterweight to competitive harm.

On 30 April 2026 the Commission published draft Horizontal and Non-Horizontal Merger Guidelines intended to change that record. The consultation closed on 26 June and the final text is expected this autumn. The drafts represent the most ambitious rewrite since the regulation entered into force, driven explicitly by the Letta and Draghi reports on European competitiveness and by a mission letter from Ursula von der Leyen to Executive Vice-President Teresa Ribera demanding that resilience, innovation and strategic scale be given proper weight.

Why the political pressure built

The Letta report, published in 2024, argued that Europe's fragmented telecoms and capital markets need consolidation to achieve the scale required for global competition. The Draghi report went further, urging the Commission to strengthen European companies' capacity to invest, innovate and withstand supply-chain shocks. Both reports landed as the multilateral trading order frayed and as Washington and Beijing deployed industrial policy tools that treat national champions as strategic assets. Von der Leyen's mission letter to Ribera made the linkage explicit: the merger guidelines must reflect "the European economy's more acute needs in respect of resilience, efficiency and innovation, the time horizons and investment intensity of competition in certain strategic sectors, and the changed defence and security environment".

That political framing matters because merger control has historically been a price-focused, consumer-welfare exercise. The existing Horizontal Merger Guidelines devote roughly two pages and thirteen paragraphs to efficiencies. They impose a three-pronged test: efficiencies must benefit consumers, be merger-specific, and be verifiable. All three conditions are cumulative. Miss one and the claim fails, no matter how strong the other two.

How the current test works in practice

Consumer benefit is measured against a benchmark that consumers will not be worse off. Variable cost savings count; fixed cost savings rarely do. Out-of-market efficiencies are accepted only if they benefit substantially the same customers harmed by the merger. Merger-specificity demands that the efficiencies cannot be achieved through any less anticompetitive alternative, licensing, joint ventures, or other cooperative arrangements, even if those alternatives are more cumbersome or expensive. The General Court has held that an alternative can be "reasonably practical" even if it is not the industry norm, provided such arrangements exist in practice. Verifiability requires the Commission to be reasonably certain the efficiencies will materialise and be substantial enough to counteract harm. Quantification helps but is not sufficient; quantified claims have been rejected.

The practical consequence is that efficiency analysis barely exists. Most mergers are cleared in Phase I without a finding of serious doubts, so efficiency claims never become relevant. Substantive analysis is confined to the minority of cases that reach Phase II. In the T-Mobile Netherlands/Tele2 Netherlands decision, the Commission acknowledged that some efficiencies met all three criteria but described the analysis as not necessary because it had already concluded the transaction would not significantly impede effective competition. The assessment of efficiencies, in other words, is triggered only after a SIEC is found.

What the draft guidelines change

The draft introduces a formal "theory of benefit", merging parties must articulate and substantiate how specific efficiencies maintain or enhance effective competition to consumers' advantage. Crucially, the guidelines state that the evidentiary standard for this theory of benefit is, in principle, the same as that applied to the Commission's own theory of harm. That is a meaningful shift: it invites earlier engagement and signals that efficiency arguments deserve equal procedural standing.

The taxonomy of recognised efficiencies is broadened. Dynamic efficiencies, innovation, investment capacity, faster time-to-market, are explicitly included. Resilience and sustainability appear for the first time as freestanding parameters of competition, not merely as incidental by-products. The guidelines also codify developments in case law, notably the Court of Justice's CK Telecoms ruling on the standard for significant impediment.

Where the symmetry breaks down

Kasia Czapracka, a partner at White & Case in Brussels who authored a detailed analysis of the draft, argues that the promised equality of arms remains incomplete. "Because the three efficiency conditions stay cumulative and each must independently meet a demanding standard, whereas harm may be established on the whole body of evidence taken together, the assessment of benefit remains structurally more exacting than the assessment of harm," she writes. That structural asymmetry is not a drafting oversight; it is baked into the architecture of the three-pronged test.

Two further gaps compound the problem. First, the draft does not squarely resolve how the choice of counterfactual should operate in the efficiencies context. The counterfactual, what happens if the merger is blocked, shapes both the harm and the benefit analysis, but the guidelines are silent on whether a different counterfactual applies to each. Second, the interaction between remedies and efficiencies is left entirely unaddressed. If the Commission accepts a divestiture or behavioural commitment to cure a competition concern, how should the remaining efficiencies be weighed? The draft offers no guidance.

Practitioner reaction and the consultation

The public consultation drew responses from merging parties, economists, national competition authorities and NGOs. There was broad consensus that reform is needed, but sharp divergence on direction. Business groups and many economists argued for a lower evidentiary threshold and a non-cumulative test. Some national competition authorities and consumer organisations warned that weakening the efficiency test would erode legal certainty and let anticompetitive mergers through the net. The Commission's challenge is to navigate that tension without producing guidelines that are challenged in court for exceeding the EUMR's text, Recital 29 and Article 2(1) are the only statutory anchors.

The CK Telecoms judgment, which lowered the threshold for finding a significant impediment in oligopolistic markets, has already shifted the balance toward intervention. That makes the efficiency side of the ledger more important, not less. If more mergers are caught by a broader theory of harm, the countervailing theory of benefit must be operable in practice, not just in principle.

The counterfactual and remedies blind spots

The counterfactual question is technical but consequential. In a standard merger review, the counterfactual is usually the market as it would evolve without the merger. But efficiencies often depend on integration that only the merger enables. If the counterfactual assumes the parties remain separate, the efficiencies vanish by definition. The draft guidelines do not clarify whether a merger-specific counterfactual, one that allows for some integration short of full concentration, is permissible when assessing efficiencies. Without that clarity, parties cannot structure their evidence.

The remedies gap is equally practical. In Phase II, the Commission frequently negotiates commitments. If a divestiture remedies the horizontal overlap but the parties' efficiency case relied on the combined asset base, the efficiencies may evaporate. The draft does not say whether the Commission should reassess efficiencies post-remedy, or whether the original efficiency claim survives. That silence will generate litigation.

A structural problem, not a drafting one

The Commission's dilemma is that the three-pronged test is not in the regulation. It is soft law, created by the guidelines themselves and upheld by the courts. Changing it substantially risks judicial pushback. But leaving it intact preserves the asymmetry that has produced a zero clearance record. The draft guidelines try to have it both ways: they declare evidentiary parity while keeping the cumulative structure that makes parity impossible. Unless the final text confronts that contradiction, or the Court of Justice eventually forces the issue, the theory of benefit will remain a theoretical right without a practical remedy.

For European companies in telecoms, defence, semiconductors and cloud infrastructure, the stakes are concrete. They need to merge to achieve the scale their US and Chinese rivals already possess. The merger regime is the gatekeeper. If the gatekeeper cannot distinguish between a merger that harms consumers and one that gives Europe a fighting chance in strategic sectors, the competitiveness agenda the Letta and Draghi reports set out will stall at the first regulatory hurdle.