Comments to the European Commission Regarding Mergers Regulation

On May 8, 2025, the European Commission launched an in-depth consultation on the EU Merger Guidelines, focusing on technical and detailed questions across seven thematic topics related to merger enforcement, including dynamic competition, sustainability, digitalisation, efficiencies, and other competition policy considerations. The Information Technology and Innovation Foundation (ITIF), the world’s top-ranked science and technology policy think tank, greatly appreciates the opportunity to respond to the European Commission’s call for information in this important public consultation.

ITIF filed both general comments and in-depth comments for this consultation. An abbreviated version of the in-depth comments follows. (Check content against the final PDF.)

Competitiveness and Resilience

General

Question A.1: In your/your client’s view, do the current Guidelines provide clear, correct and comprehensive guidance on how merger control reflects the objective of having a productive and competitive economy?

No, to an insufficient extent.

Question A.1.a.: If ‘Yes, to some extent’, ‘No, to an insufficient extent’ or ‘Not at all’] Please explain and mention in particular which provisions of the current Guidelines (if any) are not clear or correctly reflecting the objective of having a productive and competitive economy, or what you consider is missing from the Guidelines to address this objective.

The focus of the guidelines is to help assess whether a merger would significantly impede effective competition or create or strengthen a dominant position. Unfortunately, this structural understanding of competition differs from a conception of competition as either a dynamic process or a consumer welfare proscription, both of which are far better suited to having a productive and growing economy. For example, there are numerous cases where transactions may impede effective competition or create a dominant position but drive the process of innovation competition—the greatest driver of long run-economic growth—or result in static efficiencies that far outweigh any de minimis competitive harms that result from a loss of rivalry.

Question A.2.: In your/your client’s view, should the revised Guidelines better reflect the objective of having a productive and competitive economy in relation to the following aspects?

Ability and incentives of SMEs and mid-sized companies to scale up; Benefits of companies’ gaining scale; Ability and incentives of companies to invest and innovate.

Scaling up

Question A.3.: How should the Commission take into account situations where absent the merger the target company would not have the ability or incentives to scale-up? Please explain in particular:

If the target company having the ability or incentives to scale-up is a merger-specific benefit of a transaction, that may count as a prime facie efficiency gain that could be weighed against any competitive harms that transaction may pose.

Question A.3.a.: How should the Commission assess the counterfactual scenario, i.e. what would the situation be absent the merger, in particular when it comes to alternative buyers or sources of financing?

Analyzing the “but-for world” where the merger does not occur should, in general, analyze the sorts of financing and contractual relationships a firm would be likely to enter upon analysis of internal business documents and relevant historical industry behavior (e.g., a similar firm being unable to enter a contract that would have achieved the merger benefits). In general, the Commission should not treat a merger with another company as a likely result in a but-for world: like the post-merger world (e.g., efficiencies) to which the but-for world is compared, the but-for world should be based on reliable and verifiable evidence, and alternative mergers may only in very rare cases satisfy these criteria (e.g., the Commission is considering two proposed mergers of the same company).

Question A.3.b.: Should the Commission in such cases assess whether the criteria of a failing-firm defence are met, including the exit of the company’s assets from the market, and why/why not. If so, how should the Commission assess this?

The failing-firm defense is a legitimate justification for approving mergers that may result in some short-run competitive harms and the grounds that, but-for the merger, the firm will ultimately exit the market, making current conditions unpredictive of future competitive effects. To make the failing-firm defense, it is typically required that the firm be unable to meet its financial obligations in the future, be unable to reorganize successfully using bankruptcy, and that the merger reflects the least restrictive way to keep its assets productive relative to other transactions. Importantly, even if a firm may not be failing, a prima facie case showing that a merger present a risk of short-run harm can also be rebutted if a firm is sufficiently weak that it would unlikely be able to compete as vigorously in the future.

Question A.4.: What are the characteristics of markets where scale is necessary to compete effectively? Please be as specific as possible on the level of scale needed and why.

Increased scale is generally important for any firm that faces a downward sloping average cost curve: the more output there is, the cheaper production becomes on a per unit basis. Increased scale is often also particularly important in markets that have high fixed costs, which decrease on an average basis for each unit produced.

Question A.5.: What are the benefits that merged companies’ increased scale might bring to competitiveness:

By lowering costs through economies of scale, firms will be able to lower prices and increase output—benefiting consumers and competition. Increased scale can also enhance a firm’s incentives and ability to innovate by, for example, increasing the ability for the firm to recoup the costs associated with R&D.

Question A.5.1.: In a scenario where the increased scale does not create or strengthen market power (e.g., a merger between complementary players in terms of products or geography)? [Multiple selections possible]

Network effects

Mergers can result in network driven efficiencies, both direct and indirect.

Intangible capital

Mergers can result in efficiencies related to intangible capital, such as IP and brand synergies.

Access to equity investment

Mergers can result in efficiencies related to a greater ability to attract capital that, for example, can be used to fund innovation.

Ability and incentives to invest

Mergers can result in efficiencies that increase a firm’s incentive and ability to invest, such as increasing the incentive to protect its market position through innovation, or by increasing its ability to recoup the costs of R&D.

Ability and incentives to innovate

Mergers can result in efficiencies that increase a firm’s incentive and ability to innovate, such as increasing the incentive to protect its market position through innovation, or by increasing its ability to recoup the costs of R&D.

Ability and incentives to derive value from aggregation of data

Mergers can result in scale and scope driven data efficiencies that benefit consumers.

Improves access to market

Mergers can result in efficiencies that improve market access.

Ability to procure products more competitively

Mergers can result in countervailing buyer power that lower supplier costs and benefits consumers with lower prices.

Ability to compete in global markets outside the EU

The Commission should focus its competitive analysis within the relevant geographic markets at issue.

Ability to use countervailing market power

Mergers can result in countervailing bargaining power that counteracts inefficiencies in markets with powerful or monopsony buyers.

Other factors

There are countless examples of how mergers can result in these and other types of efficiency benefits. Guidelines should attempt to specify an exhaustive list of which types of benefits count as efficiencies.

No benefits are relevant

Even where efficiency benefits do not exist, the vast majority of mergers do not pose any meaningful risk of competitive harm.

Question A.5.2.: In a scenario where the increased scale creates or strengthens market power, please indicate which of the benefits identified in the previous question are still relevant for increased competitiveness of the merged entity.

Network effects

Mergers can result in network driven efficiencies, both direct and indirect.

Intangible capital

Mergers can result in efficiencies related to intangible capital, such as IP and brand synergies.

Access to equity investment

Mergers can result in efficiencies related to a greater ability to attract capital that, for example, can be used to fund innovation.

Ability and incentives to invest

Ability and incentives to innovate

Ability and incentives to derive value from aggregation of data

Mergers can result in scale and scope driven data efficiencies that benefit consumers.

Improves access to market

Mergers can result in efficiencies that improve market access.

Ability to procure products more competitively

Mergers can result in countervailing buyer power that lower supplier costs and benefits consumers with lower prices.

Ability to compete in global markets outside the EU

The Commission should focus its competitive analysis within the relevant geographic markets at issue.

j. Ability to use countervailing market power

Mergers can result in countervailing bargaining power that counteracts inefficiencies in markets with powerful or monopsony buyers.

k. Other factors

Efficiency benefits may flow from a merger even if it creates or strengthens market power or a dominant position. Indeed, in one important U.S. study which analyzed 130 transactions across various industries where the average combined market share was over 20 percent, the average HHI over 3,300 and the average delta HHI over 120, the data showed that “merging parties are more likely to lower prices drastically than non-merging parties, while the probability of substantial price increases is similar across the two groups,” with one explanation being “cost synergies that are large enough to induce the merging parties to lower prices.” Bhattacharya et al., “Merger Effects and Antitrust Enforcement: Evidence From U.S. Consumer Packaged Goods” (2023).

No benefits are relevant

Both transactions that do and do not result in a risk of competitive harm can bring about the same types of general efficiency benefits.

Question A.6.: How should the Commission assess the benefits of companies’ gaining scale through mergers when they create or strengthen market power? Please explain in particular:

In cases where a transaction results in both prima facie competitive harms and scale-driven efficiency benefits, the Commission should attempt to determine the net effect in deciding whether a transaction should be approved.

Question A.6.a.: Under which conditions could such benefits be sufficient to outweigh competitive harm? Please illustrate with specific benefits.

Evaluating whether scale-driven efficiency benefits do or not outweigh possible competitive harms must be assessed on a case-by-case basis. For example, if competitive harms are de minimis, it is likely that they will be outweighed by a transaction’s efficiency benefits. By contrast, if efficiency benefits are not merger-specific or verifiable, it is unlikely that they will outweigh the competitive harms posed by a transaction.

Question A.6.b.: Under which conditions would such benefits be passed on to business customers/consumers? Please illustrate with specific benefits.

Efficiencies that result in variable cost savings will typically be passed on to consumers through lower prices or increased output in the short-run. Indeed, efficiency benefits can still accrue to consumers in a way that outweighs competitive harms even if they are only partially passed on. However, even efficiencies that may not be immediately passed on to consumers substantially or in part should not necessarily be discounted if they result in other short-run benefits, such as an increased incentive and ability to innovate.

Question A.6.c.: What are the elements (including evidence and metrics) that the Commission could use to assess whether the benefits of scale outweigh competitive harm, and whether they will likely be passed on to business customers/consumers?

To determine whether efficiencies are sufficiently substantial enough to outweigh any competitive harms, data-driven economic modeling of a merger’s future effects can be particularly helpful. To be sure, calculating which efficiencies will be passed on to consumers can be difficult to measure in practice and is one reason why analyzing a merger’s effects on total welfare, rather than consumer welfare, can lead to a more administrable enforcement regime. As such, it is inadvisable to apply strict or rigid tests that risk over-excluding efficiency benefits on the grounds that they will not be passed on to consumers. Typically, here as well the use of economic models will be important to confirm which efficiency benefits will likely be passed on to consumers.

Question A.6.d.: How can productivity improvements of a firm be balanced appropriately against price increases that can harm productivity of other firms?

In markets defined by economies of scale, a firm that procompetitively increases its efficiency will increase sales and gain economies of scale, which can result in higher costs to competitors who lose scale as a result. This, however, is a procompetitive outcome that benefits consumers and competition, even if competitors may be harmed.

Question A.7.: Under which conditions can scale that brings benefits but creates or strengthens market power be achieved only through a merger, as opposed to other means, i.e., organic growth or cooperation?

The question of whether a merger results in merger specific benefits should be treated as independent from the issue of whether it also results in harm to consumers and competition. For example, a merger may be necessary to achieve the benefits of scale, while also resulting in potential harm to competition. By contrast, in other cases a merger may not yield substantial merger-specific efficiency benefits but pose little risk to competition or consumers.

Question A.8.: To what extent can scale that brings benefits be achieved through expansion into new geographic or product markets, rather than consolidation within the same product and geographic market?

Expansion into a different geographic or product market can generate economies of scope and scale, and whether they are viable alternatives to a merger to achieve scale benefits must be assessed on a case-by-case basis. Typically, however, geographic economies of scale and economies of scope are not interchangeable with the benefits achieved from economies of scale in a given market.

Resilience and Value Chains

Question A.9.: How should the Commission take into account the negative effects of a merger on competitors’, suppliers’ or business customers’ resilience when assessing its impact on competition? Please explain in particular:

Merger enforcement should focus on consumer welfare and competition by analyzing price, output, quality, and innovation effects. To the extent that reduced resiliency negatively affects consumer welfare and competition, it may indirectly factor into merger analysis.

Question A.9.a.: What theory/theories of harm could the Commission consider?

The extent to which a merger’s effects on resilience can result in unilateral, coordinated, or vertical harms should be assessed on a case-by-case basis.

Question A.9.b.: Under which conditions could this theory/these theories of harm occur? (E.g., number of remaining suppliers, supply concentration outside the Single Market)

A merger that results in a substantial increase in concentration may lessen resilience (e.g., reduced number of suppliers) and at the same time result in anticompetitive effects (e.g., increased coordination).

Question A.9.c.: What are the elements (including evidence and metrics) the Commission could use to assess the negative impact on competitors’ resilience post-merger?

The same sorts of elements that the Commission uses to assess coordinated, unilateral, and vertical effects should be used in cases where resiliency is a relevant factor toward determining whether these effects will occur.

Question A.10.1.: In a scenario where the merger does not create or strengthen market power, what benefits are relevant for increased resilience?

Vertical integration

Vertical integration may be a way to increase resiliency in a way that results in procompetitive efficiencies.

Better access to input through new contracts

Mergers may promote better access to input through new contracts in a way that results in procompetitive efficiencies.

c. Diversification of sources of supply

Mergers may promote diversification of supply in a way that results in procompetitive efficiencies (e.g., acquisition of a supplier that allows for expanded production in another jurisdiction).

Better conditions of purchase of inputs

Mergers may promote better conditions of purchase of inputs in a way that results in procompetitive efficiencies (e.g., increased buyer power).

Access to critical infrastructure

Mergers may promote better access to critical infrastructure in a way that results in procompetitive efficiencies.

Other factors

As the economist Joseph Schumpeter recognized long ago, increased concentration can enhance the ability for innovation by giving firms greater resilience in managing the risks associated with engaging in R&D. As such, enhancing innovation through increased resilience can constitute an efficiency benefit of a merger.

No benefits are relevant

The Commission should not treat reduced resilience as competitive harm in and of itself, but rather assess the extent to which it will lead to unilateral, coordinated, or unilateral effects.

Question A.10.2.: In a scenario where the merger creates or strengthens market power, please indicate which of the benefits identified in the previous question are still relevant for increased security of supply and resilience of the merged entity.

Vertical integration

Vertical integration may be a way to increase resiliency in a way that results in procompetitive efficiencies.

b. Better access to input through new contracts

Mergers may promote better access to input through new contracts in a way that results in procompetitive efficiencies.

c. Diversification of sources of supply

Mergers may promote diversification of supply in a way that results in procompetitive efficiencies (e.g., acquisition of a supplier that allows for expanded production in another jurisdiction).

Better conditions of purchase of inputs

Mergers may promote better conditions of purchase of inputs in a way that results in procompetitive efficiencies (e.g., increased buyer power).

Access to critical infrastructure

Mergers may promote better access to critical infrastructure in a way that results in procompetitive efficiencies.

Other factors

No benefits are relevant

The same efficiency benefits associated with resiliency that can occur in mergers that do not create or enhance market power can occur in those that do create or enhance market power.

Question A.11.: How should the Commission take into account the benefits of a merger on companies’ resilience in situations where such merger also creates or strengthens market power?

In cases where a transaction results in competitive harms and efficiency benefits that derive from a merger’s effect on resilience, the Commission should weigh harms and benefits to determine the merger’s overall likely net competitive effect.

Question A.11.a.: Under which conditions could such benefits be sufficient to outweigh competitive harm? Please illustrate with specific benefits.

See response to Question A.6.a.

Question A.11.b.: Under which conditions would such benefits be passed on to business customers/consumers, and how? Please illustrate with specific benefits.

See response to Question A.6.b.

Question A.11.c.: What are the elements (including evidence and metrics) that the Commission could use to assess whether increased resilience outweighs competitive harm, and will likely be passed on to business customers/consumers?

See response to Question A.6.c.

Question A.12.: What are the characteristics of markets or sectors where resilience is particularly important to compete effectively? (e.g., number of suppliers needed, severity of impact in case of shocks)

Transactions that may affect resiliency in a way that results in efficiency benefits can occur throughout the economy. However, to the extent that increased resiliency leads to a greater ability to innovate by economizing upon the risks associated with research and development, it may be particularly important in industries where innovation competition is a key parameter of competition.

Enhancing Investment and Innovation

Question A.13.1.: In a scenario where the merger does not create or strengthen market power, what benefits to innovation are relevant?

Network effects

Mergers can result in network driven efficiencies, both direct and indirect, that enhance innovation.

Intangible capital

Mergers can result in efficiencies related to intangible capital, such as IP and brand synergies, that enhance innovation.

Access to equity or debt capital

Mergers can result in efficiencies related to a greater ability to attract capital that, for example, can be used to fund innovation.

Integration of complementary R&D capabilities

Mergers can result in economies of scope that enhance innovation.

Integration of complementary R&D staff

Mergers can result in economies of scope that enhance innovation.

Access to new know-how, data, patents

Mergers can combine know-how, data, and patents in a way that enhances innovation.

Access to infrastructure or critical input

Mergers can result in vertical integration that enhances innovation.

Other factors

Mergers can enhance innovation by increasing a firm’s incentive to innovate in order to protect its market position and facilitate its ability to recoup the costs associated with research and development.

No benefits are relevant

N/A.

Question A.13.2.: In a scenario where the merger creates or strengthens market power, which of the above benefits are still relevant?

Network effects

Mergers can result in network driven efficiencies, both direct and indirect, that enhance innovation.

Intangible capital

Mergers can result in efficiencies related to intangible capital, such as IP and brand synergies, that enhance innovation.

Access to equity or debt capital

Mergers can result in efficiencies related to a greater ability to attract capital that, for example, can be used to fund innovation.

Integration of complementary R&D capabilities

Mergers can result in economies of scope that enhance innovation.

Integration of complementary R&D staff

Mergers can result in economies of scope that enhance innovation.

Access to new know-how, data, patents

Mergers can combine know-how, data, and patents in a way that enhances innovation.

Access to infrastructure or critical input

Mergers can result in vertical integration that enhances innovation.

Other factors

No benefits are relevant

The same innovation benefits that can be obtained in mergers that do not create or strengthen market power can also flow from mergers that do create and strengthen market power.

Question A.14.1.: In a scenario where the merger does not create or strengthen market power, what benefits to investment are relevant?

Network effects

Mergers can result in network driven efficiencies, both direct and indirect, that spur investment in innovation.

Intangible capital

Mergers can result in efficiencies related to intangible capital, such as IP and brand synergies, that spur investment in innovation.

Access to equity or debt capital

Mergers can result in efficiencies related to a greater ability to attract capital.

Integration of complementary R&D capabilities

Mergers can result in economies of scope that spur investment in innovation.

Integration of complementary R&D staff

Mergers can result in economies of scope that spur investment in innovation.

Access to new know-how, data, patents

Mergers can combine know-how, data, and patents in a way that spurs investment in innovation.

Access to infrastructure or critical input

Mergers can result in vertical integration that spurs investment in innovation.

Other factors

Mergers can spur investment by increasing a firm’s incentive to innovate in order to protect its market position and facilitate its ability to recoup the costs associated with research and development.

No benefits are relevant

N/A.

Question A.14.2.: In a scenario where the merger creates or strengthens market power, which of the above benefits are still relevant?

Network effects

Mergers can result in network driven efficiencies, both direct and indirect, that spur investment in innovation.

Intangible capital

Mergers can result in efficiencies related to intangible capital, such as IP and brand synergies, that spur investment in innovation.

Access to equity or debt capital

Mergers can result in efficiencies related to a greater ability to attract capital.

Integration of complementary R&D capabilities

Mergers can result in economies of scope that spur investment in innovation.

Integration of complementary R&D staff

Mergers can result in economies of scope that spur investment in innovation.

Access to new know-how, data, patents

Mergers can combine know-how, data, and patents in a way that spurs investment in innovation.

Access to infrastructure or critical input

Mergers can result in vertical integration that spurs investment in innovation.

Other factors

No benefits are relevant

The same benefits to investment that can be obtained from mergers that do not create or strengthen market power can also flow from mergers that do create and strengthen market power.

Question A.15.: In which type of markets/sectors are smaller or larger firms typically more innovative? Please provide supporting data and evidence.

It has long been documented how the relationship between market structure and innovation can take the form of an inverted-U, whereby increased concentration can increase innovation up until concentration reaches so high a level that innovation decreases. See: Philippe Aghion at al., “Competition and Innovation: An Inverted-U Relationship,” 120 Q. J. Econ. 701 (2005); Michael R. Peneder & Martin Woerter, Competition, “R&D and Innovation: Testing the Inverted-U in a Simultaneous System,” 24 J. of Evolutionary Econ. 653 (2014) (Switzerland); Michael Polder & Erik Veldhuizen, “Innovation and Competition in the Netherlands: Testing the Inverted-U for Industries and Firms,” 12 J. of Ind. Competition and Trade 67 (2012) (Netherlands); Chiara Peroni & Ivete Gomes Ferreira, “Market competition and innovation in Luxembourg,” 12 J. of Ind, Competition and Trade 93 (2012) (Luxembourg). There is some evidence that, in certain industries, smaller entrants may be more likely to engage in disruptive innovation large incumbents may be more likely to engage in incremental innovations that constitute the greatest share of overall innovation driven gains to economic growth. See, e.g., Garcia-Macia et al., “How Destructive Is Innovation?” (May 2018).

Question A.16.: How do different market structures (e.g., oligopolies, markets with a dominant firm) influence the ability and incentives to innovate and invest?

Consistent with the inverted-U framework, mergers that result in an industry moving from a market structure defined by effective or monopolistic competition to one that reflects an oligopoly or has a dominant firm can result in an increased incentive and ability to innovate and invest. For example, large firms may have a greater incentive and ability both to appropriate the costs of R&D as well as have more to lose from disruptive innovation such that they will invest more in innovation than an upstart rival. However, mergers that create a monopoly market structure may not increase incentives to innovate and invest—in this scenario, incentives for the monopolist to avoid cannibalization and an “exit competition” effect may dominate.

Question A.17.: How should the Commission factor in that competition to invest and innovate may take place at global level while markets for consumers may be of narrower geographic scope?

In defining innovation markets to assess a transactions effect on innovation, geographic markets may be defined more broadly than in existing product markets if the R&D programs in different countries are reasonably interchangeable and pose competitive constraints on one another.

Question A.17.a.: In which circumstances may a merger reduce competition globally even if firms were not competing in the same narrow geographic markets? How should this be considered?

Mergers may regularly have competitive effects globally but not in the relevant geographic market the Commission may be analyzing. Indeed, even if the geographic market is global (i.e., firms from around the world compete for European consumers), the Commission should nonetheless focus on the effects on European consumers and competition,

Question A.17.b.: In which circumstances may a merger reduce competition at a narrow geographic level, even if it benefits global competition? How should this be considered?

Antitrust analysis typically seeks to identify the narrowest relevant product and geographic markets for assessing a merger’s effects on competition. As such, it is not uncommon that a merger may reduce competition in a more narrow geographic market (and thus be deemed unlawful) even if it results in efficiencies on a global basis.

Merger Control and Globalisation

Question A.18.: What are the benefits companies may enjoy due to their global presence that give them a competitive advantage in Europe?

Less regulation outside Europe

Less regulation outside Europe may give a company a competitive advantage in Europe, for example, by providing them with a better environment to innovate and ultimately market those new products in Europe.

Lower costs outside Europe

Lower costs outside Europe may give a company a competitive advantage in Europe, for example, by more resources to innovate and ultimately market those new products in Europe.

Better access to raw materials/manufacturing

Better access to raw materials/manufacturing outside Europe may give a company a competitive advantage in Europe, for example, allowing it produce at a cheaper cost including for European products.

Better access to financing/equity

Better access to finance/equity outside Europe may give a company a competitive advantage in Europe, for example, helping them to fund R&D and scale more quickly and ultimately market new products in Europe.

Lower environmental/social standards

Avoid the costs of regulation may give a company a competitive advantage in Europe, for example, by avoiding the costs associated with regulation and having more resources to invest in innovation.

Other factors

There are myriad reasons why a company may benefit from a global presence in ways that give it a competitive advantage in Europe.

No benefits are relevant

The Commission should not treat a company differently simply because it may be a multinational and enjoy benefits from a global scale when assessing whether a transaction will result in anticompetitive effects.

Question A.19.: How should the Commission factor in competitive advantages linked to global presence when assessing a merger?

A merger resulting in increased competitive advantages linked to a global presence does not constitute cognizable antitrust harm. However, the Commission should evaluate whether a merger can result in efficiencies that benefit European consumers through increased geographic scale, such as by more efficiently moving production facilities to lower cost areas.

Question A.19.a.: Are these advantages reflected in market shares? Why/why not?

Whether a firm obtains efficiencies from operating globally cannot be discerned by analyzing its market share alone. However, a firm that benefits from economies of scale by operating globally may as a result have a competitive advantage against rivals that increases its market share.

Question A.19.b.: How and when can subsidies in other markets be considered a competitive advantage in the relevant market?

Subsidies in other markets can be a competitive advantage to the extent they allow a firm to reduce prices, increase output, or better innovate in the other relevant market.

Question A.19.c.: Under which circumstances, and with what evidence, can such advantages be considered part of the structural counterfactual?

See response to Question A.19.a.

Question A.20.: What would be pro-competitive consolidations in global strategic sectors (e.g., digital, deep-tech, clean tech, biotechnologies) that would benefit competition in the Single Market? Please explain in terms of competitive harm and benefits.

Consolidations and partnerships in global strategic sectors can be critical to driving innovation that benefits the Single Market. These can include transactions between large American technology firms and European AI startups that provide the latter with the scale, resources, and know-how they need to innovate more quickly and effectively—benefiting competition in the Single Market.

Assessing Market Power Using Structural Features and Other Market Indicators

General Assessment of Guidelines

Question B.1.: In your/your client’s view, do the current Guidelines provide clear, correct, and comprehensive guidance with regards to structural indicators / market features as well as the frameworks to assess coordination and foreclosure theories of harm? [Single choice]

No, to an insufficient extent.

Question B.1.a.: [If answered b, c, or d] Please explain and mention which provisions are unclear or missing from the current Guidelines.

In general, the Guidelines’ focus on condemning transactions that impede effective competition or result in a dominant position will chill transactions that benefit consumers through either static or dynamic efficiencies.

Question B.2.: Do you consider that the current structural indicators / market features and/or the broad frameworks to assess coordination and foreclosure theories of harm should be substantially revised?

Structural indicators / market features to assess likelihood of anticompetitive effects in horizontal mergers; Structural indicators / market features to assess dominance; Structural indicators / market features to assess likelihood of anticompetitive effects in non-horizontal mergers; Framework to assess likelihood of coordination in non-horizontal mergers; Framework to assess potential foreclosure in conglomerate mergers.

Structural Indicators and Presumptions

Question B.3.: What structural indicators / market features should the Commission use to assess the likelihood of anticompetitive effects in horizontal mergers? (e.g., market share, HHI, others)

Structural evidence like market shares and industry concentration levels (e.g., HHIs) can be a starting point to assess the anticompetitive effects of mergers, especially when evaluating coordinated effects.

Question B.4.: Should structural indicators be stricter or give rise to legal presumptions? Or should they be laxer? Please justify with legal/economic reasoning and evidence.

Structural indicators should be stricter so as to ensure that any structural rebuttable presumption of anticompetitive harm avoids false positives. Specifically, low thresholds for structural presumptions may chill transactions that enhance dynamic competition given the inverted-U relationship that exists between market structure and innovation.

Question B.5.: Based on which indicators should dominance be assessed? Should there be a presumption of dominance at certain thresholds, and should it be based on market share alone or combined with other indicators?

Structural indicators should only give rise to a rebuttable presumption of harm in cases where the transaction results in both very high HHI and delta-HHI levels (e.g., a merger that creates a duopoly or monopoly). Presumptions based on the market share of a single firm market should be disfavored, such as a presumption that a merger that results in an over 50 percent market share is prima facie anticompetitive. While this would imply a market HHI of over 2500, which is typically understood to be highly concentrated, it is possible that the delta HHI from the transaction could be very small and thus the effects on competition and consumers de minimis (e.g., a firm with a 49 percent share acquires a firm with a 1 percent share and three other firms with 20 percent, 17 percent, and 13 percent shares remain in the market).

Question B.6.: Which indicators should be used to assess a SIEC (Significant Impediment to Effective Competition) when dominance is not created or strengthened? Should there be thresholds or guidance for this?

The analysis of whether a transaction may result in SIEC short of a dominant position should include an analysis of market structure, past industry behavior, intent, and future economic performance, particularly as it concerns the possibility of a merger resulting in oligopolistic collusion. In mergers that impede effective competition but where a dominant position does not exist, unilateral effects may be highly unlikely unless there is especially strong evidence that the merging parties are particularly close competitors.

Question B.7.: What type and level of evidence should the Commission rely on to establish that a merger will significantly impede effective competition in dominance cases and non-dominance cases?

While the Commission should rely on the same types of intent, structure, conduct, and performance evidence in all cases where it believes competition will be harmed, transactions that result in the creation or enhancement of dominance are ceteris paribus far more likely to be anticompetitive than those that merely impede effective competition.

Coordination Effects and Market Conditions

Question B.8.: Which structural indicators / market features should be used to assess coordinated effects? Are they realistic to identify coordination risks?

The same sorts of intent, structure, conduct, and performance evidence that is generally used to evaluate a merger’s effects are applicable to specific coordinated effects theory of harm.

Question B.9.: Can non-horizontal mergers lead to coordinated effects? If so, in what circumstances? (Differentiate vertical vs conglomerate mergers)

Non-horizontal mergers can result in coordinated effects in some cases. For example, the acquisition of a key upstream supplier can be used to prevent a maverick firm from disrupting downstream collusion vis-à-vis the threat of withholding upstream supply.

Question B.10.: Under what conditions may a merger increase the risk of coordination or make coordination more stable/effective? (Detail conducive market conditions)

There are a number of conditions that may affect whether a merger is likely to result in coordinated effects. These include the number of firms in a market and their market shares, the presence of maverick firms, whether firms can easily monitor one another’s pricing, whether products in the market are homogeneous, whether sales are small and frequent, and whether the industry has a history of successful coordination.

Question B.11.: When do companies have incentives to follow rather than deviate from coordination? Explain the role of monitoring/deterrence and required evidence.

In general, firms are more likely to engage in tacit collusion the easier it is to coordinate and the higher the costs associated with cheating. With respect to structural evidence, the more concentrated the market (except in the limit case of merger to monopoly), in general the more likely collusion will be. With respect to intent, internal documents showing an intent to engage in collusion post-merger will of course be highly probative. Natural experiments, such as a history of past successful collusion, can also shed light on whether coordinated effects are likely, as can evidence that there are no maverick firms. Price leadership models may also be a more quantitative way to assess the likelihood of collusion.

Question B.12.: When can countervailing factors (e.g., outsider reactions) defeat coordination risks post-merger? What factors and evidence are needed?

Even if a prima facie case that a merger may result in increased coordination, countervailing factors may exist that make coordination unlikely. These include entry as well as expansion by existing firms that greatly reduce the incentives and ability for the existing market players to coordinate.

Non-Horizontal Mergers and Foreclosure

Question B.13.: Which indicators / market features should be used to assess non-horizontal foreclosure effects? Please specify if they support ability, incentive, or effect prongs. (Differentiate vertical vs conglomerate mergers)

Non-horizontal merger enforcement should focus on proscribing vertical transactions that raise rivals costs, either through input or customer foreclosure, and create power over price in a way that harms consumers. This is broadly consistent with the ability, incentive and effect framework. Conglomerate mergers, by contrast, should not be a part of non-horizontal merger enforcement: to the extent that the merged firm is able to engage in, for example, anticompetitive bundling as a result of the merger, this can enforced post-merger using Articles 101 and 102.

Question B.14.: What should be the test and standard to assess foreclosure risks in non-horizontal mergers? Is the “ability, incentive, effects” test appropriate? Are there overlaps or opportunities to simplify/clarify the test?

In order for a vertical transaction to harm competition, the merged firm must have substantial market power it can use to foreclose rivals (i.e., ability), it must make economic sense to exclude rather than do business with rivals (i.e., incentive), and ultimately be likely to produce the anticompetitive effect of increased power over price in a way that harms consumers (effect). And, unlike horizontal mergers, structural presumptions of harm should not be applied, as any incentives to foreclose are concomitant with incentives to lower prices through the elimination double marginalization (EDM). As such, that structural indicators may indicate a firm has both upstream and downstream market power are not sufficient to demonstrate that a vertical merger will be anticompetitive.

Question B.15.: How should the Commission assess financial incentives to foreclose? Specify the most relevant indicators and the role of quantitative economic analysis.

To weigh incentives to foreclose with incentives to lower prices, a case-by-case analysis is required, as the theoretical economic literature is unclear as to which incentives generally dominate. Most importantly, given the interrelation between foreclosure and EDM incentives, both must be evaluated together in evaluating the merged firms incentives, and which can typically be analyzed using empirics like margin and diversion data.

Innovation and Other Dynamic Elements in Merger Control

General

Question C.1.

In your/your client’s view, do the current Guidelines provide adequately clear, correct and comprehensive guidance on how the Commission considers dynamic criteria in its assessment of the impact of mergers on competition (dynamic merger effects are linked to firms’ forward-looking behaviours, particularly their ability and incentives to invest and innovate, as well as to enter or exit a market in the mid-to-long term. Dynamic merger effects can be either positive, leading to efficiencies, or negative, leading to harm)?

No, to an insufficient extent.

Question C.1.a.

Please explain and mention in particular which provisions of the current Guidelines (if any) do not provide adequately clear, correct and comprehensive guidance on dynamic criteria to assess the impact of mergers on competition.

While the current horizontal mergers correctly note how merger efficiencies can include “new or improved products or services, for instance resulting from efficiency gains in the sphere of R&D and innovation,” there are a number of transactions which may enhance innovation and benefit consumers even if they result in dominance or a lack of effective competition. This is consistent with the long established “inverted-U” literature showing how increased concentration can result in greater innovation, including in oligopoly markets that may have a dominant firm or lack effective competition. Future guidelines should attempt to address this “innovation gap” by moving away from structural metrics like dominance and effective competition to a more direct focus on the competitive process and welfare effects.

Question C.2.: In your/your client’s view, should the revised Guidelines better reflect dynamic criteria in the assessment of the impact of mergers on competition? Please select the areas that you believe the revised Guidelines should better address.

Innovation; Investments; Potential Competition; Entry as countervailing factor; Counterfactual; Failing firm defence; Standard of proof and evidence on future market developments.

Innovation and Investments

Question C.3.: In what circumstances can mergers negatively impact the ability and incentives of the merged company to innovate (e.g., a merger between strong innovators, acquisition of an innovator, acquisition of an input critical for other companies to innovate)?

Mergers may harm innovation if they lead to a reduction in quality such as through reduced incremental product improvements. Mergers may also harm innovation to the extent that there are adverse coordinated or unilateral effects in a market for research and development for more disruptive innovations where the parties compete.

Question C.3.a.: What theory/theories of harm could the Commission consider (i.e., that would impede a company’s innovation post-merger)? Please distinguish between theories applicable to horizontal and non-horizontal mergers.

The Commission should consider the same sorts of unilateral, coordinated, and vertical effects when evaluating reductions in quality or a loss of competition in an innovation market.

Question C.3.b.: Under which conditions could this theory/these theories of harm materialise?

Whether a transaction is likely to lead to a reduction in incremental or more disruptive R&D competition must be assessed on a case-by-case basis, but are more likely to occur in markets that are defined by these types of quality or innovation competition.

Question C.3.c.: What are the elements, including relevant factors, evidence and metrics, that the Commission could use to assess the potential reduction of the companies’ ability and incentives to innovate post-merger?

The same sorts of intent, structure, conduct, and performance evidence that are used to evaluate price and output effects are generally informative when assessing whether a transaction will result in a reduction in quality or incremental product improvements. However, in analyzing competition in an R&D market, structural presumptions are inappropriate given the inverted-U relationship between market structure and innovation, although mergers to monopoly will still likely be treated as unlawful unless entry or efficiencies considerations negate the likelihood of anticompetitive harms.

Question C.4.: In what circumstances can mergers negatively impact the ability and incentives of the merged company to invest? Based on which evidence and metrics can the Commission conclude that a merger will likely harm investment?

See response to Question C.3.

Question C.5.: How should the Commission account for the incentives to invest and innovate post-merger depending on specific market features? Please explain which market characteristics are relevant and should be considered.

See response to Question C.3.b.

Question C.6.: In what circumstances can the elimination of a (small) but particularly innovative player with a large competitive potential harm competition?

Horizontal mergers that eliminate a small competitor that poses a significant risk of dynamic expansion can result in harm to innovation competition are a particular concern in markets where either incremental or more disruptive innovation is a key dimensionality of competition.

Question C.6.a.: How should the Commission account for the ability and incentives of nascent innovative companies to scale up when assessing the impact of a merger on competition?

The Commission should always consider dynamic expansion by competitors when assessing the potential for a merger to harm competition, both with respect to the merging parties, and with respect to third-party competitors who are able to expand in a way that limits the merged firm from exercising market power post-merger.

Question C.6.b.: What theory/theories of harm could the Commission consider (e.g., killer acquisitions, barriers to entry, or entrenchment of dominance)?

Horizontal mergers that eliminate a small competitor that poses a significant risk of dynamic expansion can result in harm to innovation competition if the small competitor is a particularly close competitor with the other firm (unilateral effects) or is poised to act as a maverick disrupting collusion (coordinated effects). However, fears about underenforcement in the form of failing to protect potential competition in technology markets from “killer acquisitions” appear to be overstated. In particular, concerns about killer acquisitions may be more well-founded in pharmaceutical markets characterized by drastic innovations, where innovation milestones are easy to observe, rather than in technology markets.

Question C.6.c.: Under which conditions could this/these theories of harm materialise?

Question C.6.d.: What are the elements, including relevant factors, evidence and metrics, that the Commission could use to assess the potential reduction of nascent innovative companies’ ability and incentives to scale up post-merger?

In assessing the competitive effects of mergers of firms that are poised to expand through innovation, market shares are typically not predictive by virtue of underemphasizing the competitive significance of the expanding firm. For this reason, intent, conduct, and performance evidence are in general more informative as to likely post-merger conditions.

Question C.7.: In what circumstances can mergers positively impact the ability and incentives of the merged company to innovate? Based on which evidence and metrics can the Commission conclude that a merger advances innovation?

Mergers can enhance innovation in two general ways. First, horizontal mergers may enhance innovation by providing firms with increased scale that increases their incentives and abilities to engage in R&D and innovation. Indeed, even mergers that result in a three firm oligopoly may in some cases improve consumer welfare by enhancing dynamic competition. Second, non-horizontal mergers can enhance innovation capabilities through the combination of complementary assets. An example would be an innovative pharmaceutical company being bought by a large incumbent who has the resources and know how to more efficiently bring new drugs to market.

Question C.7.a.: What elements, evidence and metrics can the Commission consider when balancing potential R&D benefits and spillovers against anticompetitive effects?

Balancing the dynamic and innovation benefits of a merger with potential short run static harms like higher prices can be extremely difficult and may not admit of suitable quantitative evidence that can help predict the overall effect on market performance. With respect to structural evidence, the inverted-U analysis provides a useful starting point: mergers that create a monopoly are more unlikely to have dynamic benefits that outweigh short run harms than mergers that may create oligopoly where the risk of coordination is not low (e.g., not a duopoly with market characteristics that make collusion possible).

Question C.8.: In what circumstances can mergers positively impact the ability and incentives of the merged company to invest? Based on which evidence and metrics can the Commission conclude that a merger advances investment?

See response to Question C.7.

Elimination of Potential Competition and Entry as Countervailing Factor

Question C.9.: In what circumstances can the elimination of a potential competitor (that is likely to enter the market in the near future or already exerts competitive constraints) harm competition?

Mergers that reduce perceived potential competition (i.e., the acquisition of a firm that is perceived as a potential competitor) or actual potential competition (i.e., the acquisition of a firm that has the ability to be enter the market and compete) can under certain circumstances harm competition.

Question C.9.a.: How should the Commission assess competition risks where a merger eliminates a potential competitor? What theories of harm could be considered?

Relevant factors in analyzing competitive effects from acquisitions that involve a potential competitor would include the existence of a highly concentrated market, a clear perception or capability of the potential competitor to affect competition, as well as an already existing or likely procompetitive impact on the market. For acquisitions that involve actual potential competitors where the firm poses no existing constraint on the market, the Commission should take particular care to ensure that it does not chill procompetitive transactions based on speculative theories of harm, in part by focusing its enforcement on consummated transactions where there is direct evidence of anticompetitive harm (e.g., the potential competitor quickly develops what would have been a superior competitive product post-merger). Coordinated and unilateral effects theories would remain the central bases for demonstrating competitive harm.

Question C.9.b.: Under which conditions could these theories of harm occur? Do these conditions vary for entry into a new product market vs a new geographic market? Can perceived threats suffice?

Transactions that are likely to harm consumers from a loss of potential competition can occur in any industry, but are of particular concern in markets where entry is a significant factor in ensuring competitive markets. Indeed, transactions that reduce perceived potential competition are typically more concerning than mergers which may reduce actual potential competition, as a perceived potential competitor is often already posing an existing competitive constraint on the market due to the perceived threat of entry.

Question C.9.c.: What are the elements, including evidence and metrics, that the Commission could use to assess the risks linked to elimination of potential competition?

In assessing the competitive effects of mergers that involve a potential competitor, market shares are typically not predictive by virtue of potential competitors not yet having any actual market share. For this, intent, conduct, and performance evidence are in general more informative as to likely post-merger conditions.

Question C.10.: How should the Commission assess whether a potential competitor is likely to exert sufficient competitive constraints to countervail the merging parties’ market power?

Timely, sufficient, and likely entry by potential competitors is often reason for approving mergers that may pose a risk of prima facie competitive harm.

Question C.10.a.: Under which conditions could this countervailing factor be sufficient? Please explain likelihood, timeliness, and sufficiency, and based on which evidence and metrics.

Consistent with the focus of merger enforcement on short-run effects, timely entry should typically occur within 1-2 years. Whether entry is likely should be assessed by analyzing whether it is profitable for the merged firm to enter the market, and the extent to which entry barriers do or do not limit its ability do so. Sufficiency should be evaluated by analyzing, for example, the potential competitor’s ability to compete at scale either as a maverick (coordinated effects) or with a product that is a particularly close substitute to those of the merging parties.

Question C.10.b.: What are the elements, including evidence and metrics, that the Commission could use to alleviate competition risks due to potential competition?

For firms identified as “rapid entrants,” timeliness can effectively be presumed such that they already effectively fall within the relevant market. Similarly, for potential competitors that are already perceived as such, rigid evidence regarding sufficiency of entry need not be put forward due to already existing competitive pressures on the market. By contrast, firms that are would qualify actual potential competitors are by their very nature likely entrants, such that the emphasis should be on showing timeliness and sufficiency.

Question C.10.c.: Should the conditions for entry as a countervailing factor be the same as for the elimination of a potential competitor as a theory of harm?

The same sorts of considerations about likelihood, timeliness, and sufficiency in determining whether entry can rebut a prima facie case of anticompetitive harm will apply in determining whether the acquisition of a potential competitor is anticompetitive.

Counterfactual and Failing Firm Defence

Question C.11.: How should the Commission consider the pre-merger situation in the counterfactual assessment? In particular, how should it treat companies’ decisions or agreements influenced by the merger’s perspective?

The same sorts of analysis that is used to assess the but-for world generally in merger analysis are applicable in cases where the but-for world involves a failing firm.

Question C.12.: What constitutes the right counterfactual where crises (e.g., COVID-19, wars) have led to short-term shocks that may be temporary?

Because the focus of merger enforcement is on short-term effects, significant short-term temporary crises can significantly impact whether a firm is a flailing or even, in certain cases, a failing firm.

Question C.12.a.: Under which circumstances should such events be considered structural, and based on which evidence?

Whether an event is structural, and thus more conducive to a firm’s failure, as opposed to temporary, and as such more potentially more likely to result in a flailing firm, should be assessed on a case-by-case basis.

Question C.13.: What should be the right counterfactual in cases of acquisitions of firms in financial difficulties?

The same sorts of analysis that is used to assess the but-for world generally in merger analysis are applicable in cases where the but-for world involves a failing firm.

Question C.13.a.: Under which conditions should a failing firm defence be accepted? Which factors should the Commission consider regarding efficiencies or balancing market power?

The failing-firm defence is a legitimate justification for approving mergers that may result in some short-run competitive harms and the grounds that, but-for the merger, the firm will ultimately exit the market, making current conditions unpredictive of future competitive effects. To make the failing-firm defence, it is typically required that the firm be unable to meet its financial obligations in the future, is unable to reorganize successfully using bankruptcy, and that the merger is the least restrictive way to keep its assets productive relative to other transactions.

Question C.13.b.: Absent a failing firm defence, how may financial difficulties of the target affect the Commission’s assessment of its competitive constraints going forward?

In addition to the failing firm defense, a merger that involves a flailing firm may also obviate the risk of anticompetitive effects. This sort of defense applies if a firm is not able to compete effectively in the future due to, for example, steadily and substantially declining market performance, a lack of resources, and/or heavy financial difficulties.

Question C.14.: What should be the right counterfactual in acquisitions of firms in declining markets where demand is permanently shrinking (e.g., due to technology or consumer behaviour shifts)?

The same sorts of analysis that is used to assess the but-for world generally in merger analysis are applicable in cases where the but-for world involves a flailing firm.

Type and Quality of Evidence on Future Market Developments

Question C.15.: Given the Court of Justice’s guidance, should greater uncertainty in long-term projections be counterbalanced by requiring a more significant expected impact?

See response to Question C.16.

Question C.16.: How far in the future should the Commission look when assessing the impact of a merger? Under what conditions should long investment cycles in a given industry be considered?

The Commission should focus on the short-run competitive effects of a merger, typically within two years of consummation.

Question C.17.: How should the Commission factor in systemic trends (e.g., AI, critical technologies) unrelated to the merger but potentially impacting the relevant product market? What evidence and metrics should be used?

The analysis of longer-term historical industry trends can be helpful in understanding short-run competitive effects—for example, evidence that an industry is undergoing another cycle of disruptive economic change that makes anticompetitive effects unlikely.

Sustainability & Clean Technologies

General

Question D.1.: In your/your client’s view, do the current Guidelines provide clear, correct, and comprehensive guidance on how merger control reflects the transition to a climate neutral, clean, and sustainable economy with clean and resource-efficient technologies and solutions?

Not at all.

Question D.1.a.: [If answered b, c, or d] Please explain which provisions of the current Guidelines (if any) do not adequately reflect the evolutions linked to the transition to a climate neutral, clean, and sustainable economy.

The Guidelines should be focused on promoting competition through lower prices, increased output, improved quality, and greater innovation—not sustainability. However, promoting competition and innovation is consistent with sustainability goals: fostering innovation through merger enforcement will, ceteris paribus, lead to greater and greener energy innovation.

Question D.2.: In your/your client’s view, should the revised Guidelines better reflect the evolutions linked to the transition to a climate neutral, clean, and sustainable economy in relation to the following aspects?

The revised Guidelines should not reflect any of these areas.

Theories of Harm & Risks

Question D.3.: How should the Commission factor in sustainability as a parameter of competition in its assessment of a merger’s effects? In particular, please explain in which circumstances and based on which metrics (e.g., shares of saved CO2 emissions) and evidence the Commission could consider the development of sustainable products or services as an important parameter of competition.

To the extent that, in certain markets, sustainability may be a parameter of competition (e.g., more innovative green products), it may factor into merger analysis. For example, if a merger risks reducing R&D competition for new and more sustainable technologies, that would constitute an actionable anticompetitive effect. However, that a merger may reduce sustainability does not by itself, as distinct from any reduction in quality adjusted prices, innovation, or other dimensionality of competition in a relevant market, constitute cognizable antitrust harm and can actually reflect efficiencies (e.g., a merged firm will more utilize less clean energy in production to lower costs).

Question D.4.: What type of harm to competition on the development and supply of clean and decarbonised products, technologies and services and the circular economy can a merger do? Please select the harm that you believe is relevant for mergers’ assessment and provide concrete examples and underlying data.

Reduced ability and incentives to invest and develop clean and decarbonised products, technologies and services; Risks of discontinuation of clean and decarbonised products’, technologies’ and services’ R&D; Foreclosure of access to critical inputs for clean and decarbonised products, technologies and services; Increased prices and lower quality of critical inputs for clean and decarbonised products, technologies and services; Foreclosure of access to clean and decarbonised products, technologies and services; Increased prices and lower quality of clean and decarbonised products, technologies and services.

Question D.5.: How should the Commission consider the ability and incentives to invest and develop clean and decarbonised products, technologies and services in its assessment of the impact of a merger on competition?

The same considerations about the general relationship between concentration and innovation are relevant to markets involving clean and decarbonized products, technologies and services. Consistent with the inverted-U relationship between market structure and innovation, a merger between competing providers of clean and decarbonized products, technologies and services may increase innovation and benefit consumers even if the transaction impedes effective competition or creates a dominant position. Similarly, vertical mergers in energy markets may result in economies of scope that foster innovation.

Question D.5.a.: Having in mind both horizontal and non-horizontal mergers, please explain in particular: What theory/theories of harm could the Commission consider?

The same sorts of unilateral, coordinated, and vertical theories that the Commission generally considers should be evaluated in markets that involve the sale or development of clean and decarbonised products, technologies and services.

Question D.5.b.: Having in mind both horizontal and non-horizontal mergers, please explain in particular: Under which conditions could this/these theory/theories of harm occur?

The same sorts of conditions the Commission generally considers when assessing whether a merger will result in unilateral, coordinated, or vertical effects will be relevant in markets that involve the sale or development of clean and decarbonised products, technologies and services.

Question D.5.c.: Having in mind both horizontal and non-horizontal mergers, please explain in particular: What are the elements, including evidence and metrics, that the Commission could use to assess the competition risks beyond a foreclosure conduct?

The same sorts of evidence and metrics the Commission generally considers when assessing whether a merger will result in unilateral or coordinated effects should be evaluated in markets that involve the sale or development of clean and decarbonised products, technologies and services. Moreover, these markets do not provide an exceptional case where the Commission should pursue conglomerate theories of harm.

Competitive Benefits

Question D.6.: What are the competitive benefits, related to clean and decarbonised products, technologies and services, and the circular economy, that a merger can generate? Please select the advantages that you believe are relevant for supporting the climate and clean transition and provide concrete examples and underlying data.

Vertical integration involving critical inputs; Better access to, or better purchase conditions of, critical inputs through new contracts; Combination of complementary R&D capabilities and staff; Access to new know-how and patents; Other factors (please list)

The same myriad types of efficiencies that mergers can generally bring may obtain in markets involving clean and decarbonised products, technologies and services.

Question D.7.: How should the Commission assess the benefits that mergers can bring to the transition to a climate neutral, clean, and sustainable economy, and verify that those are not mere claims made by businesses gaining market power (e.g., ‘greenwashing’)? What are the metrics that could be used to measure this?

The Commission should conduct the same type of verifiability analysis it engages in generally to assess merger efficiency claims in markets that involve the sale or development of clean and decarbonised products, technologies and services.

Question D.7.a.: In which circumstances, and based on which evidence, benefits related to the transition to a clean and sustainable economy are likely to materialise post-merger?

The same sorts of circumstances and evidence the Commission generally considers when assessing whether a merger is likely result in dynamic efficiency benefits be evaluated in markets that involve the sale or development of clean and decarbonised products, technologies and services.

Question D.7.b.: Under which conditions could such benefits be sufficient to outweigh competitive harm? Please illustrate with the specific benefits you considered relevant.

The same sorts of conditions the Commission generally considers when assessing whether a merger will result in dynamic efficiency benefits that outweigh competitive harms should be evaluated in markets that involve the sale or development of clean and decarbonised products, technologies and services. For example, to the extent that dynamic efficiency benefits are not-merger specific, they will not outweigh competitive harms resulting from a transaction. To be sure, weighing the innovation benefits of a merger in the energy space toward developing new sustainable technologies against short run harms to consumer welfare (e.g., higher energy prices prices) is a complex exercise that is unlikely to admit of any clear quantitative metrics for predicting post-merger market performance. However, and consistent with the inverted-U relationship between concentration and innovation, the innovation benefits are much more likely to outweigh short run competitive harms in cases where the merger does not involve the creation of a monopoly market structure.

Question D.7.c.: Under which conditions would such benefits be passed on to business customers/consumers? Please illustrate with the specific benefits you considered relevant.

The same sorts of conditions that are generally considered to assess when a merger’s efficiency benefits are passed on to consumers should be evaluated in markets that involve the sale or development of clean and decarbonised products, technologies and services.

Question D.7.d.: What are the elements, including evidence and metrics, that the Commission could use to assess whether the benefits of the transition to a climate neutral, clean, and sustainable economy outweigh competitive harm, and will likely be passed on to business customers/consumers?

The same sorts of evidence and metrics that are generally used to assess when a merger’s efficiency benefits are passed on to consumers should be evaluated in markets that involve the sale or development of clean and decarbonised products, technologies and services.

Question D.8.: How should the Commission make sure that such benefits cannot be achieved with less harmful means, including via cooperation agreements? Please explain how green benefits can be achieved through cooperation and in which circumstances only a merger may bring such benefits and why.

The same sort of analysis that is generally used to assess when a merger’s efficiency benefits are merger-specific should be conducted in markets that involve the sale or development of clean and decarbonised products, technologies and services.

Question D.9.: Please provide examples of the types of mergers as well as of cooperation agreements (e.g., licensing, R&D sharing) that you/your client believe are beneficial to the transition to a climate neutral, clean, and sustainable economy, and explain whether your company has considered or implemented them and why/why not, as relevant.

Mergers that enhance innovation in energy markets by increasing the incentive and ability for firms to develop clean and decarbonised products, technologies and services will be beneficial toward the transition to a climate neutral, clean, and sustainable economy.

Question D.10.: How should the Commission make sure that such green competitive benefits would not have been achieved irrespective of the merger? Please explain how the Commission can, and based on which evidence and metrics, assess what would have been the situation absent the merger, and whether the green competitive benefits would not have been achieved in any case.

Global Dynamics and Chilling Effects

Question D.11.: How should EU merger control account for global competition dynamics when it comes to sustainability, in particular where certain players receive subsidies for clean tech solutions?

The Commission should consider global competition dynamics when it comes to evaluating competitive effects in markets that involve the sale or development of clean and decarbonised products, technologies and services to the extent that the relevant geographic market is global.

Question D.12.: Have you/your client experienced chilling effects in your industry, in the sense that a merger that would boost investment or innovation in clean tech and resource-efficient or sustainable solutions was not pursued due to concerns related to merger control scrutiny?

No.

Question D.12.1.: If yes, please identify the specific transaction that was abandoned, delayed, or restructured.

N/A.

Digitalisation

General

Question E.1.: In your/your client’s view, do the current Guidelines adequately reflect the evolutions linked to the digitalisation of the economy?

Not at all.

Question E.1.1.: [If answered b, c, or d] Please explain, and mention in particular which provisions of the current Guidelines (if any) do not adequately reflect the evolutions linked to the digitalisation of the economy.

The Guidelines should be focused on promoting competition through lower prices, increased output, improved quality, and greater innovation—not digitalization per se. However, promoting competition and innovation is consistent with digitalization goals: sound merger enforcement in digital markets, ceteris paribus, lead to greater digitalization through innovation.

Question E.2.: In your/your client’s view, should the revised Guidelines better reflect the evolutions linked to the digitalisation of the economy in relation to the following aspects?

Other.

Question E.2.1.: Please provide a reasoning for the aspects you have selected and explain how the revised Guidelines should address these aspects.

There is no need for Guidelines to provide guidance that is specifically tailored to digital markets. Rather, the Guidelines should be industry-agnostic and set out general legal and economic principles that are applicable in digital markets. Indeed, phenomena like network effects, non-price competition, the use of data, and dynamic entry are not all unique to the digital space, even if they are often particularly relevant to analyzing competitive effects in these markets.

Competitive Dynamics and Parameters of Competition

Question E.3.: How should the Commission take into account the following competitive dynamics in its assessment of the impact of mergers on competition?

“Tipping”/“Winner takes most” dynamics

“Tipping” or “winner takes most” dynamics in an industry are not evidence that a merger is more likely to result in anticompetitive harm, but only that barriers to entry may exist. Moreover, the incidence of tipping occurring is often overstated, as leading dominant firms are often not the first-movers in digital markets, which also often display multi-homing.

Network effects

Network effects, just like economies of scale more generally, are not evidence that a merger is more likely to result in anticompetitive harm, but only that barriers to entry may exist.

Customer inertia

Product stickiness may constitute switching costs that factor into the analysis of whether barriers to entry exist in a given market.

Data-driven competition

Guidelines can make clear that data can be a key dimensionality of competition in many industries. For example, the combination of data achieved through a merger can be an important efficiency that benefits consumers and competition.

Privacy protection-driven competition

Guidelines can make clear that quality and incremental product improvements can be a key dimensionality of competition in many industries.

Multi-sidedness of markets

Guidelines can make clear that in platform markets, it is proper to define relevant markets in ways that encompass all sides of the platform to take into account indirect network externalities.

Other competitive dynamics you consider relevant

The presence of dynamic entry and technological changes in digital market may often counteract the likelihood that a transaction will result in harm to competition.

Question E.4.: What other elements linked to the digitalisation of the economy do you consider are highly relevant for the Commission’s merger assessment? Please provide a reasoning for each element and explain how the Commission should take them into account.

As a general matter, the continued digitalization of the economy should not be viewed with concern as it pertains to competition. For example, although some have expressed fears about increased concentration in the economy over the past two decades of digitalisation, these concerns are often overstated. Moreover, even where concentration or markups may have increased over the past several decades, that does not mean competition isn’t working. On the contrary, studies continue to find that higher concentration and markups are not fueled by price increases, but instead cost reductions driven by the sort of efficiencies that bring lower prices for consumers—and which, for example, another AI wave of general-purpose technological innovation and digitalization would continue to empower.

Frameworks of Analysis and Entrenchment

Question E.5.: From your perspective and considering modern competitive dynamics, do you consider that having different frameworks of analysis for horizontal relationships (when merging companies are active on the same market) and for non-horizontal relationships (when merging companies are active on different markets) is still relevant?

Yes.

Question E.5.1.: Please explain. Please also explain under what framework the Commission should assess potential counterstrategies or retaliation by competitors in the assessment of foreclosure strategies of the merged entity?

Unlike horizontal mergers, vertical mergers do not involve the elimination of a competitor and instead entail inherent procompetitive incentives to increase output through EDM. Vertical mergers may in some cases result in harm to competition through foreclosure, but this can be mitigated to the extent that competitors can employ counterstrategies or retaliation that reduce the merged firm’s incentive to foreclose (e.g., entry and expansion).

Question E.6.: How should the current frameworks of analysis for horizontal and for non-horizontal relationships be adapted to assess the effects that digital and tech mergers can have on competition? In particular, please explain which framework of analysis you believe would capture adequately the effects of digital and tech mergers on competition when a leading company seeks to acquire a complementary business and may entrench its market power as a result.

There is no need to adapt the frameworks for horizontal and for non-horizontal relationships to assess the effects that digital and tech mergers can have on competition, which are the same unilateral, coordinated and vertical effects theories that the Commission generally considers. What differs is only the facts and dynamics that define any particular industry, which in the case of digital markets often reflects scale driven innovation competition and disruptive changes that facilitate entry.

Question E.7.: How should the Commission assess competition risks of non-horizontal mergers that are not based on a foreclosure conduct by the merged entity? In your reply, you may consider also mergers outside of the digital and tech industries.

The Commission should not assess the competition risks of non-horizontal mergers that are not based on foreclosure conduct—conglomerate theories of harm should not be the object of merger enforcement. Rather, anticompetitive bundling or tying should be addressed post-merger through Articles 101 and 102 where applicable.

Question E.7.a.: Please explain in particular: What theory/theories of harm could the Commission consider?

See response to Question E.7.

Question E.7.b.: Please explain in particular: Under which conditions or market circumstances could this/these theory/theories of harm materialise?

See response to Question E.7.

Question E.7.c.: Please explain in particular: What are the elements, including relevant factors, evidence and metrics, that the Commission could use to assess the competition risks of non-horizontal mergers beyond a foreclosure conduct?

See response to Question E.7.

Question E.8.: How should the Commission assess possible theories of harm to competition linked to increased barriers to entry and expansion of rivals, including on the application of paragraph 36 of the Horizontal Merger Guidelines (“HMG”)? What specific elements should the Commission focus on?

Mergers that increase entry barriers may be anticompetitive to the extent they limit competition from a perceived potential or actual potential competitor. Mergers that reduce the ability of a rival to expand can harm actual competition, particularly if the rival was likely to be a particularly close competitor or maverick in a highly concentrated market.

Ecosystem and Interrelated Products

Question E.9.: How should the Commission assess competition risks of non-horizontal mergers linked to having a broad range or portfolio of products or services that are interrelated or part of an “ecosystem”? Please consider also mergers outside of the digital and tech industries and explain in particular:

Question E.9.a.: What theory/theories of harm could the Commission consider?

While relevant product markets are almost always comprised of substitutes, broader markets that cluster non-competing products and services may in some cases be defined. Alternatively, in the case of some multi-sided platforms, broader markets that take into account the network externalities across the platform should also be defined.

Question E.9.b.: Under which conditions or market circumstances could this/these theory/theories of harm or concerns materialise?

Cluster markets can be defined where customers and sellers find it significantly more efficient to respectively buy and distribute the services together. Broader platform markets can be defined in cases where markets are multi-sided, there are reciprocal indirect network effects across the platform, and that platform enables a simultaneous transaction between users on different sides of the platform, as in a transaction platform.

Question E.9.c.: What are the elements, including evidence and metrics, that the Commission could use to assess the potential competition risks linked to having an increased portfolio of interrelated products and services?

The Commission should consider the same types of quantitative and qualitative evidence for assessing whether a cluster market or platform market should be defined as it does to define relevant markets generally. Quantitative tests can include the hypothetical monopolist test (with modifications), and qualitative evidence can exclude evidence of past substitution and other relevant data regarding market realities.

Data-Related Concerns and Aggregation of Data

Question E.10.: How should the Commission assess competition risks linked to the merged entity’s accumulation of data? Please consider also mergers outside of the digital and tech industries and explain in particular:

Question E.10.a.: What theory/theories of harm could the Commission consider?

As distinct from data as a product offering, mergers that aggregate data do not in and of themselves raise any concerns about horizontal effects. However, data aggregation can under some circumstances enhance barriers to entry that limit the ability for a merger that otherwise presents anticompetitive effects to be mitigated. Moreover, to the extent data is an input, mergers that aggregate data can present vertical concerns under some circumstances.

Question E.10.b.: Under which conditions or market circumstances could this/these theory/theories of harm materialise?

The same general considerations that apply when analyzing barriers to entry and input foreclosure should be evaluated in cases where data may constitute a barrier to entry or vehicle for input foreclosure.

Question E.10.c.: What are the elements, including evidence and metrics, that the Commission could use to assess competition risks linked to the accumulation of data?

The same sorts of evidence and metrics that apply when analyzing barriers to entry and input foreclosure should be evaluated in cases where data may constitute a barrier to entry or vehicle for input foreclosure.

Question E.11.: How should the Commission assess the relevant standard and criteria determining the value of the target’s data in the context of data aggregation? Please select and explain the relevant criteria in the context of data accumulation that would be determinative for assessing the value of the data:

Question E.11.1.: Please explain the relevant criteria you have selected.

The question of whether data constitutes a barrier to entry or means of input foreclosure should be determined on a case-by-case basis, and many factors may be relevant to that assessment. However, in order for data to constitute a barrier to entry or means of input foreclosure, typically data must have substantially high levels of value, volume, quality, uniqueness, and (limited) accessibility (i.e., excludable).

Targeted Foreclosure

Question E.12.: How should the Commission assess competition risks linked to targeted foreclosure conducts (e.g., conducts that lead to only some competitors being fully or partially foreclosed, or to partial restriction or degradation of access to key inputs or other products or services)? Please consider also mergers outside of the digital and tech industries and explain in particular:

Question E.12.a.: What theory/theories of harm could the Commission consider?

Foreclosure can either occur through input foreclosure (i.e., when a competitor is limited from accessing an input it needs to compete) or customer foreclosure (i.e., when a competitor is limited from accessing the customers to whom it sells).

Question E.12.b.: Under which conditions or market circumstances could this/these theory/theories of harm materialise?

For both input and customer foreclosure to occur, there must be an incentive to foreclose, the ability to foreclosure, and likely effects in the form of increased power over price.

Question E.12.c.: What are the elements, including evidence and metrics, that the Commission could use to assess competition risks linked to targeted foreclosure conducts?

The Commission should evaluate the same types of intent, structure, conduct and performance evidence it generally uses to analyze the effects of mergers when it comes to vertical mergers that pose a risk of foreclosure. However, in the case of foreclosure, structural presumptions of harm should not be applied.

Interoperability Issues and Access

Question E.13.: How should the Commission assess competition risks linked to access and interoperability concerns resulting from a non-horizontal merger? Please consider also mergers outside of the digital and tech industries and explain in particular:

Question E.13.a.: What theory/theories of harm could the Commission consider?

Limiting interoperability and access can be a way in which a firm engages in either input or customer foreclosure.

Question E.13.b.: Under which conditions or market circumstances could this/these theory/theories of harm materialise? In particular, not to impede effective competition, should the Commission establish that post-merger there will be sufficient interoperability and access for all companies to compete, or that the interoperability will be the same for all companies, so there is no competitive advantage for the merged entity’s products and services?

The same sorts of conditions that determine the incentives, ability, and effects associated with the merged firm’s foreclosure incentives are relevant to cases where the vehicle for foreclosure is limiting interoperability or access.

Question E.13.c.: What are the elements, including evidence and metrics, that the Commission could use to assess competition risks linked to access or interoperability issues?

The same sorts of evidence and metrics that the Commission considers when evaluating incentives, ability, and effects associated with the merged firm’s foreclosure incentives should be applied to cases where the vehicle for foreclosure is limiting interoperability or access.

Future Market Dynamics and Technological Changes

Question E.14.: In markets driven by technological changes, what would be an appropriate timeframe for the Commission to adequately assess the impact of mergers on competition? Should there be a distinction between markets before and after “tipping” to a leading company?

The Commission should generally focus on evaluating the short-term effects of mergers (approximately two years), including in markets driven by technological change. Moreover, the Commission should not attempt to distinguish between markets before or after “tipping,” but merely consider the extent to which barriers exist that limit entry in the short-run.

Question E.15.: What metrics and evidence should be used to adequately assess likely future market trends and developments post-merger, including in terms of business models, technologies, and trade patterns?

The same sorts of intent, structure, conduct, and performance evidence that the Commission generally considers to evaluate whether a merger will result in anticompetitive effects should be analyzed to consider likely future market trends.

Privacy and Data Protection

Question E.16.: Do you consider that the Commission’s past case practice regarding privacy and data protection considerations (e.g., in M.8788 - Apple/Shazam, M.9660 - Google/Fitbit) was appropriate? If not, please outline in detail where you disagree with the approach taken by the Commission.

The Commission’s decisions not to challenge that Apple/Shazam merger, and approve the Google/Fitbit merger with conditions agreed to by Google and which the Commission believed were needed to prevent harm to competition by limiting barriers to entry, were not inappropriate.

Question E.17.: Please outline the framework within which the revised Guidelines should reflect privacy and data protection considerations, if at all. Please outline how this framework fits within the legal mandate set by the EU Merger Regulation.

Mergers that may reduce user privacy are not, in and of themselves, anticompetitive. However, in cases where privacy is an important parameter of competition vis-à-vis product quality, a reduction in privacy may constitute anticompetitive harm.

Question E.18.: Do you believe the revised Guidelines should provide guidance on the relationship between data protection and privacy considerations and the availability of sufficient alternatives and market power? If so, please outline the framework you would propose for addressing the interplay between privacy and data protection regulation (e.g., the GDPR) and the EU Merger Regulation.

The revised Guidelines should not provide guidance on the relationship between data protection and privacy considerations and the availability of sufficient alternatives and market power.

Efficiencies

General

Question F.1.: In your/your client’s view, do the current Guidelines provide clear, correct and comprehensive guidance on how the Commission assesses merger efficiencies?

Yes, to some extent.

Question F.1.1.: [If answered a, b, c, or d] Please explain and mention in particular which provisions of the current Guidelines (if any) are not clear or correctly reflecting the objective of assessing merger efficiencies, or what would be missing for the current Guidelines to address this objective.

The Guidelines are correct that “[c]onsumers may also benefit from new or improved products or services, for instance resulting from efficiency gains in the sphere of R & D and innovation.” Future Guidelines could, among other things, make clear that that this can occur not just by scale that increases the incentive (e.g., a greater incentive to protect strong market position) and ability (e.g., greater ability to recoup investments in R&D), but also through vertical transactions that enhance dynamic capabilities through economies of scope.

Question F.2.: In your/your client’s view, should the revised Guidelines better reflect how the Commission is assessing merger efficiencies in the overall competitive appraisal of a merger in relation to the following aspects? Please select the areas that you believe the revised Guidelines should better address.

Benefits to consumers

Calculating which efficiencies will be passed on to consumers can be difficult to measure in practice and is one reason why analyzing a merger’s effects on total welfare, rather than consumer welfare, can lead to a more administrable enforcement regime. As such, it is inadvisable to apply strict or rigid tests that risk over-excluding efficiency benefits on the grounds that they will not be passed on to consumers.

b. Merger-specificity of efficiencies

The Guidelines should make clear that efficiencies will be considered merger-specific if a merger is reasonably necessary to achieve them.

c. Verifiability of merger efficiencies

Revised Guidelines should not conflate the quantum of evidence with the quantum of proof in demonstrating efficiencies—if quantitative evidence is not available, that does not mean a greater amount of efficiencies is needed to offset anticompetitive harms, but only that a greater amount of qualitative evidence may be required to prove verifiability.

Other

Revised Guidelines should not categorically discount fixed cost efficiencies, but instead assess whether they may be passed on to consumers on a case-by-case basis.

The revised Guidelines should not better reflect any of these areas

N/A.

Benefit to Consumers

Question F.3.: How should the Commission assess whether merger efficiencies will benefit consumers that would otherwise be harmed by the loss of competition resulting from the merger? In particular, please explain:

Question F.3.a.: For which types of efficiencies and under which conditions those efficiencies will likely be passed on to consumers?

Efficiencies come in myriad forms and whether they will be passed on to consumers should be assessed on a case-by-case basis.

Question F.3.b.: Whether there are some types of transactions that, due to their nature, or the characteristics of the products or markets at hand, are more prone to efficiencies?

In general, mergers (both horizontal and vertical) are a procompetitive form of business conduct.

Question F.3.c.: How should the Commission establish that the efficiencies (in-market and out-of-market) will benefit substantially the same consumers who might be harmed by the loss of competition resulting from the merger?

The Commission should weigh in-market efficiencies with in-market competitive harms to determine the net effect of the merger. While out-of-market efficiencies are typically not considered in order to ensure an administrable merger regime, in platform contexts with network externalities markets should be defined broadly to ensure that they take into account efficiency benefits on all sides of the platform.

Question F.3.d.: How should the Commission trade-off benefits and harm between different consumer groups when efficiencies benefit only a certain group of consumers?

In some cases, such as when price discrimination is possible, the Commission could identify targeted customer groups that may be particularly harmed by a merger, even if other groups of customers are not.

Question F.3.e.: How should the Commission trade-off benefits that may materialise already short-term (e.g., product improvements) and harm to consumers that could materialise in the longer run (e.g., entrenchment of an already strong or dominant market position, raising barriers to entry)?

The Commission should not condemn mergers that result in short-term efficiency benefits on the speculative grounds that they will result in long-run consumer harms; both merger benefits and harms should be evaluated using the same time horizon (i.e., short run).

Question F.4.: What metrics, evidence and factors should be used to assess whether cost efficiencies are likely to be passed on to consumers in the form of lower prices? Please explain.

Typically, the use of economic modeling will be important to confirm which efficiency benefits may not be passed on to consumers.

Question F.4.a.: Assessment whether costs are variable costs or fixed costs.

In general, variable cost efficiencies are more likely to be passed on to consumers in the short-run than relative to fixed cost efficiencies. However, the Commission should not categorically discount the possibility for fixed-cost efficiencies to benefit consumers, but rather make this assessment on a case-by-case basis.

Question F.4.b.: Empirical assessment of pass-on from past cost changes.

There are countless examples of how mergers can result in these types of efficiency benefits. As one recent comprehensive study in the United States found, “There is zero basis to doubt the once-settled wisdom underpinning the basic framework for merger review: mergers can and do advance procompetitive business objectives….[T]here is evidence of mergers leading to efficiencies in a wide range of industries, including for both goods and services, and for both highly commoditized and highly differentiated products.” See Maureen K. Ohlhausen & Taylor M. Owings, Evidence of Efficiencies in Consummated Mergers, (June 2023).

Question F.4.c.: Remaining competitive pressure (either from existing rivals or potential entry) on the merged entity.

Mergers that increase efficiency will ceteris paribus increase the incentives for rival firms to engage in their own efficiency enhancing behaviors to be able to better compete with the merged firm.

Question F.4.d.: Other (please specify).

N/A.

Question F.5.: What metrics, evidence and factors should be used to assess whether consumers benefit from improved goods or services that may result from increased investment and innovation (‘innovation efficiencies’)? Please explain.

The Commission should analyze the same sorts of evidence it generally considers when examining whether efficiencies will be passed on to consumers in cases where those efficiencies concern increased investment and innovation.

Question F.5.a.: Consumers’ willingness to pay as measured by actual purchasing behaviour.

Consumers’ willingness to pay as measured by actual purchasing behaviour can be a means to assess the cognizability of innovation efficiencies.

Question F.5.b.: Consumers’ willingness to pay as measured by consumer surveys.

Consumers’ willingness to pay as measured by consumer surveys can be a means to assess the cognizability of innovation efficiencies.

Question F.5.c.: Benefits from improved zero-priced products/services measured by consumer engagement (e.g., trends in number of users or hours of engagement).

Benefits from improved zero-priced products/services measured by consumer engagement (e.g., trends in number of users or hours of engagement) can be a means to assess the cognizability of innovation efficiencies..

Question F.5.d.: Other.

The fact that innovation efficiencies may not be easily quantifiable in some cases should not change the legal standards for assessing whether they are verifiable, merger-specific, passed on to consumers, and likely to outweigh competitive harms.

Question F.6.: What would be an appropriate timeframe for efficiencies to be considered timely? Please explain whether this would differ per industry, and indicate under what circumstances this timeframe should be longer or shorter.

Timely efficiencies should be in the short-run (approximately 2 years).

Question F.7.: How can competitive benefits and harms accruing in the near future be balanced with competitive benefits and harms accruing in the more distant future? Please explain in particular how to balance situations where the benefits of a merger would only materialise in the more distant future (and to establish that these distant events are likely), while the harm would materialise shortly after the merger.

The Commission should not attempt to balance the net short-run effect of a merger with speculative net long-run effects of a merger. For example, mergers that present substantial short run harms to competition are not generally outweighed by the prospect of long-run product innovations in the future. However, even where innovation may only occur in the long-run, more upstream benefits in terms of greater R&D and invention may occur in the short-run and can be considered cognizable efficiency benefits.

Merger-Specificity

Question F.8.: How should the Commission assess whether efficiencies are a direct consequence of the notified merger? Please explain in particular which evidence and metrics the Commission could use.

To determine whether efficiencies are merger-specific, the Commission should ask whether the merger is reasonably necessary to achieve them.

Question F.9.: How should the Commission assess whether efficiencies cannot be achieved to a similar extent by less anticompetitive alternatives?

Conduct evidence is often highly probative in determining whether a merger is reasonably necessary to achieve efficiency benefits. For example, if efficiencies were unable to be obtained through a prior contract between the merging parties, that is strong evidence that the efficiencies may be merger-specific.

Question F.9.a.: In particular: How should the Commission take into account less anticompetitive alternatives of a non-concentrative nature (e.g., a licensing agreement, a cooperative joint venture or a network sharing) and a concentrative nature (e.g., a concentrative joint venture, or a differently structured merger)?

The Commission should evaluate whether the merger is reasonably necessary to achieve efficiencies relative to the alternatives that would have likely been pursued in absence of the merger.

Question F.9.b.: In particular: How should the Commission assess whether a less anticompetitive alternative is reasonably practical and what market circumstances might impact that assessment?

Reasonably practicable alternatives are those which would have been likely to be attempted to achieve efficiency benefits without a merger.

Verifiability

Question F.10.: How should the Commission make sure that the efficiencies claimed by the parties are verifiable and likely to materialise? Please explain in particular which evidence and metrics the Commission could use.

Conduct evidence is often highly probative evidence in determining whether a merger is likely to result in efficiencies. Intent, as garnered through business documents, can also be instructive.

Question F.11.: How can merger efficiencies, in particular when it comes to non-price efficiencies, be identified and quantified? Please explain to what extent merger efficiencies need to be quantified for the Commission to conclude that they will outweigh the competitive harm, and how.

In some cases, non-price efficiencies, such as output expansion and quality improvements, can be sufficiently quantified and balanced against price harms. However, the Commission should not require quantitative evidence to justify efficiency claims as a general matter, even if it may require a greater amount of qualitative evidence to justify efficiency claims if quantitative evidence is absent.

Question F.12.: Based on which evidence and metrics can the Commission alleviate uncertainties as to the implementation of efficiencies, in particular when they will not materialise in the very short term?

In cases where it is unclear whether efficiencies are likely to materialize, economic tools like merger simulations are often the best and most objective way to determine the extent to which a merger is likely to result in efficiency benefits that offset competitive harms.

Question F.13.: What evidence should be taken into account to verify efficiencies? Please select the evidence that you believe are relevant and substantiate your reply, especially pointing to specific challenges in the assessment of such evidence.

Internal documents, including those used by management to decide on the merger

Internal documents, including those used by management to decide on the merger, often constitute important evidence in determining whether a merger will result in efficiency benefits.

Statements from management, owners and financial markets about expected efficiencies

Statements from management, owners and financial markets about expected efficiencies often constitute important evidence in determining whether a merger will result in efficiency benefits.

Historical examples of efficiencies and consumer benefit

Historical examples of efficiencies and consumer benefit often constitute important evidence in determining whether a merger will result in efficiency benefits.

Pre-merger external experts' studies on the type and size of efficiency gains and on the extent to which consumers are likely to benefit

Pre-merger external experts' studies on the type and size of efficiency gains and on the extent to which consumers are likely to benefit often constitute important evidence in determining whether a merger will result in efficiency benefits.

Economic models, including those investigating the merging parties’ and their rivals’ ability and incentives to invest and innovate

Economic models, including those investigating the merging parties’ and their rivals’ ability and incentives to invest and innovate often constitute important evidence in determining whether a merger will result in efficiency benefits.

Other

The above categories should not be viewed as exhaustive.

Question F.13.f.: If you have indicated ‘Other’, please specify.

Other types of evidence may arise that attest to the verifiability of efficiencies that should be evaluated on a case-by-case basis.

Public Policy, Security, and Labour Market Considerations

Security and Defence

Question G.1.: In your/your client’s view, should the revised Guidelines better reflect how the Commission assesses defence and security considerations in EU merger control in relation to the following aspects?

Other.

Question G.1.d.: If Other, please specify.

The Guidelines should focus on the Commission’s competition analysis. To the extent that defence and security considerations factor into its broader merger control regime, that should be addressed separately.

Question G.2.: In your experience, have there been interventions by Member States (in particular in the context of an application of Art. 21(4) EU Merger Regulation) which resulted in mergers that would have otherwise happened, not taking place? Have such interventions thus preserved industry fragmentation? Please provide relevant examples.

ITIF is not aware of any mergers that were explicitly approved on competition grounds that should have been denied on defence grounds or vice versa.

Question G.3.: What specific parameters may be relevant when assessing the impact of mergers that involve markets for dual-use goods or services (i.e., goods or services used for military and civil applications) on competition?

For purposes of analyzing competitive harm the effect of defence mergers on government customers should be analyzed in the same way that effects would be measured on civilian consumers.

Media Plurality

Question G.4.: In your/your client’s view, do the current Guidelines provide clear, correct and comprehensive guidance on how the EU merger control assessment takes into account democracy and media plurality considerations?

Not at all.

Question G.4.1.: [If answered b, c, or d] Please explain and mention in particular which provisions of the current Guidelines (if any) are not clear or correctly reflecting democracy and media plurality considerations in merger’s competitive assessment, or what would be missing for the current Guidelines to address this objective.

The current Guidelines rightly do not provide guidance upon whether a transaction will harm democracy or media plurality, but instead focus on its effects on competition and consumers.

Question G.5.: In your/your client’s view, should the revised Guidelines better reflect how the Commission assesses democracy and media plurality considerations in EU merger control in relation to the following aspects?

Media diversity/plurality as a parameter of competition.

Question G.6.: In which circumstances and under which conditions can the Commission consider that a Member State is taking appropriate measures against a merger that is justified to protect its media plurality in the sense of Art. 21(4) EU Merger Regulation?

The Commission should seek to foster a merger regime where enforcement is focused at the EU level and on the analysis of whether a transaction will harm competition.

Question G.7.: How should the Commission take into account the consequences of increased market power not only vis-à-vis customers but also vis-à-vis public authorities that may also affect customers? Please explain your answer having in mind the legal mandate of the EU Merger Regulation.

The claim that increased market power is a threat to democratic accountability does not bear scrutiny. Indeed, effective competition is neither a necessary nor sufficient condition for democracy: a small pharmaceutical company may have tremendous market power but have little to no political influence; by contrast, a small well-connected firm may, for various reasons, have exceptional levels of political influence. Indeed, market power can support democracy by fostering innovation that empowers citizens and disrupts the economic power of entrenched incumbents that dominate the political status quo.

Question G.8.: Please outline in which sectors the competitive impact of a merger on democracy and media plurality is most likely to be highest? Please provide your view in particular on the generative AI sector.

In media markets, protecting competition and consumer welfare may have direct second-order effects on protecting democracy and fostering media plurality, even if this should not be a goal of competition enforcement.

Question G.9.: Under which circumstances and in which conditions should the Commission consider diversity, including in the sense of diversity of opinions, in its assessment of the impact of mergers on competition? Please explain your answer having in mind the legal mandate of the EU Merger Regulation.

In media markets, protecting competition and consumer welfare may have direct second-order effects on protecting diversity of opinions, even if this should not be a goal of competition enforcement.

Labour Markets and Workers

Question G.10.: In your/your client’s view, do the current Guidelines provide clear, correct and comprehensive guidance on how the EU merger control assessment considers the impact of mergers on labour markets and workers?

Not at all.

Question G.10.1.: [If answered b, c, or d] Please explain and mention in particular which provisions of the current Guidelines (if any) are not clear or correctly reflecting the impact on labour markets and workers in merger’s competitive assessment, or what would be missing for the current Guidelines to address this objective.

The current Guidelines rightly do not provide guidance upon whether a transaction will harm labor markets and workers.

Question G.11.: In your/your client’s view, should the revised Guidelines better reflect how the Commission assesses the impact on labour markets and workers in EU merger control in relation to the following aspects?

Other.

Question G.11.1.: If Other, please specify.

Merger enforcement should focus on protecting competition, innovation, and consumers, not labor as a general matter.

Question G.12.: How should the Commission assess the impact of a transaction on wages/working conditions through increased buyer power in labour markets? In particular, please explain:

Question G.12.a.: How should the Commission define and assess potentially numerous relevant “buying” markets for labour (which might be segmented by factors such as occupation/education and geography)?

To the extent necessary to protect competition and consumers, the Commission should define buying markets for labor using the same tests used to define markets when analyzing sell side market power. However, the Commission should make clear that a firm having sell-side market or monopoly power does not all mean that it has buyer or monopsony power in a labor market, as labor markets are typically much broader than product markets. For example, a software engineer who works for a monopoly firm may find robust competition for their labor from firms in other high-tech markets.

Question G.12.b.: What theory/theories of harm could the Commission consider? Please keep in mind the legal mandate of the EU Merger Regulation.

Unlike mergers that increase market power, mergers that create buyer power or a lack of effective competition in labor markets do not pose a prima facie risk of harm to consumers, as the former may result in both lower costs that are passed on to consumers in the form of lower prices and increased industry output. As such, mergers that increase employer power should not be condemned unless they also result in harm to consumers and competition. This typically occurs only in mergers that result in the creation of a monopsony labor market where both workers and consumers could be harmed.

Question G.12.c.: Under which circumstances and conditions can a monopsony theory of harm for labour markets occur?

Mergers that create monopsony power for labor and will lead to consumer harm are rare and typically limited to circumstances involving a “company town” where one employer dominants a local community.

Question G.12.d.: Based on which evidence and metrics can the Commission assess the impact of a merger on wages and working conditions via the creation of monopsony power?

To assess whether a merger that increases buyer power over labor is anticompetitive, the Commission analyze whether downstream output has decreased and avoid any attempt to weigh any harms to labor with benefits to consumers.

Question G.12.e.: How can the Commission demonstrate that the impact of a merger on wages and working conditions translates into harm to customers? Is it necessary under the legal mandate of the EU Merger Regulation to demonstrate harm to customers in addition to a negative impact on wages and working conditions?

In order to condemn a transaction that harms labor, the Commission should have to show harm to customers, typically through reduced output.

Question G.13.: How should the Commission assess mergers that result in increased buyer power more generally (i.e., not only in labour markets)?

The Commission should define buying markets the same general tests (as modified appropriately) used to define markets when analyzing sell side market power.

Question G.13.a.: What theory/theories of harm could the Commission consider?

Unlike mergers that increase market power, mergers that create buyer power or a lack of effective competition do not pose a prima facie risk of harm to consumers, as the former may result in both lower costs that are passed on to consumers in the form of lower prices and increased industry output. As such, mergers that increase buyer power should not be condemned unless they also result in harm to consumers and competition. This typically occurs only in mergers that result in the creation of a monopsony where both sellers and consumers could be harmed.

Question G.13.b.: Under which circumstances and conditions could this/these theory/theories of harm occur? Please explain what would be an appropriate and achievable framework to assess increased buyer power.

Mergers that increase buyer power and harm consumers are most likely to occur in situations where there is a merger to monopsony between powerful buyers that have a demonstrated ability to obtain favorable terms from suppliers, such as through price discrimination.

Question G.13.c.: Based on which evidence and metrics can the Commission assess the impact of a merger on buyer power, and how can it assess whether buyer power translates into harm to customers?

The Commission should analyze the same sorts of intent, structure, conduct and performance evidence that is typically evaluated to understand the competitive effects of a merger, principally to determine whether the merger will ultimately reduce output downstream.

Question G.13.d.: Is it necessary under the legal mandate of the EU Merger Regulation to demonstrate harm to customers in addition to a negative impact on upstream suppliers?

In order to condemn a transaction that results in increased buyer power, the Commission should have to demonstrate harm to consumers.

Other Sectors

Question G.14.: Do you/your client consider that mergers can positively or negatively impact strategic sectors’ (other than clean tech, deep tech, digital and security and defence sectors) capabilities?

Yes.

Question G.14.1.: Please explain under which circumstances mergers could improve or harm strategic sectors’ (other than clean tech, deep tech, digital and security and defence sectors) capabilities. Please specify the strategic sector(s) and distinguish between mergers creating or strengthening market power, and those that do not, as relevant.

By enhancing output and innovation in strategic sectors, mergers can improve their performance. By contrast, mergers that lead to a reduction in output or innovation can result in harm to strategic sectors. In its Hamilton Index, ITIF has identified 10 industries that are particularly strategic in the context of global competition with China: IT and Information Services, Computers and Electronics, Chemicals, Machinery and Equipment, Motor Vehicles, Basic Metals, Fabricated Metals, Pharmaceuticals, Electrical Equipment, and Other Transportation. See: Robert D. Atkinson and Ian Tufts, “The Hamilton Index, 2023: China Is Running Away With Strategic Industries” (Dec. 2023).