CRA has submitted its response to the European Commission’s Draft Merger Guidelines, drawing on our direct experience developing and testing economic analysis in complex merger investigations.
Our European Competition team has contributed to the economic assessment in nearly a third of distinct merger decisions cited in the draft, (46 out of 164) giving us a direct perspective on the case practice that underpins the framework.
We welcome the Commission’s draft as a timely effort to modernise EU merger control and better reflect developments in economic thinking over the last 20 years.
The draft marks a shift toward a more expansive and structured approach. Our response focuses on ensuring that this framework remains balanced, evidence-based and operational, particularly in the areas of efficiencies, innovation and dynamic competition. Notably, the guidelines should more clearly reflect established economic principles and avoid creating presumptions that go beyond the current evidence from the economic literature.
A central theme to our response is the treatment of efficiencies. We strongly welcome the increased prominence given to efficiencies and the move towards a more structured framework. However, there are areas where this framework could be improved:
- The text should be tweaked to underline that the principles of verifiability and quantification will be applied in a balanced way. The final guidelines should make clear that the objective is to test rigorously the likelihood and size of efficiencies that benefit consumers, not to create an evidentiary bar that is practically impossible to meet.
- Merger specificity should be tied more directly to the counterfactual: the standards that apply to the theory of harm when constructing a counterfactual from hypotheticals, rather than from observed pre-merger outcomes, should also apply to efficiencies.
- We consider the guidelines current approach to the “substantially the same consumers” principle too restrictive. This is particularly so in multi-sided markets and vertical supply chains, as well as cases where a transaction produces substantial benefits across related markets.
We also emphasise that the guidelines should maintain a clear focus on consumer welfare and competition, not competitors. Harm to rivals, including where it results from efficiency gains, should only be relevant where it translates into harm to competitive constraints and ultimately consumers.
On substantive assessment, we highlight two broader concerns:
- We have significant concerns with the changes in tone and approach to non-horizontal mergers that lose the key economic insight that these mergers are generally less likely to be problematic than horizontal ones.
- The increased emphasis on innovation and dynamic effects is welcome, but the draft at times introduces presumptions which in our view go further than the economic literature suggests.
More generally, we encourage the Commission to avoid structural presumptions and instead rely on case-specific economic analysis, particularly in areas such as market power, innovation and foreclosure.
While we have important technical suggestions to improve the draft, we welcome the ambition of the guidelines and look forward to continuing to engage with the Commission as the guidelines are finalised and as the economic toolkit is developed through future case practice.
