Position
Federation of German Industries e.V.
Date: 26 June 2026
6.
A. Introduction
The Federation of German Industries (BDI) welcomes the ‘new approach’ to European competition policy announced by Commission President Ursula von der Leyen, according to which competition policy – and in particular merger control – needs to be better geared to common European goals and more supportive of companies scaling up in global markets, as well as the clear focus on competitiveness, resilience and incentives for innovation, as reflected in strategic documents such as the Competitiveness Compass and the Draghi and Letta expert reports Against this backdrop, we support the European Commission in its ambitious plan to fundamentally revise the Merger Control Guidelines after some 20 years and to shape them in a forwardlooking manner. The guidelines must be adapted to the new market realities arising, amongst other things, from advancing globalisation, geopolitical upheavals, the digitalisation of the economy and the decarbonisation of industry. In doing so, it is important to find a balanced approach that promotes the global competitiveness and growth of European companies, whilst at the same time ensuring fair competition in the single market and providing companies with the necessary legal certainty and predictability regarding merger control decisions.
We expressly welcome the fact that the Commission has already addressed many of the German industry’s demands in its draft guidelines put out for consultation. Among other things, we would like to highlight the following as particularly positive:
▪ The expanded competition parameters and the announcement of a more forward-looking, dynamic competition analysis that goes beyond shortterm effects and also takes into account medium- to long-term impacts on innovation, investment plans and the EU’s strategic objectives, such as resilience, competitiveness and sustainability;
▪ the significantly improved systematic consideration of potential efficiency gains, which, as a new ‘theory of benefit’, are to be assessed at an early stage in the procedure and treated as theoretically equivalent to the ‘theory of harm’;
▪ the explicit recognition that economies of scale can also promote competition – for example, by strengthening global competitiveness or mitigating innovation risks;
▪ theclearfocusoninnovation,aswell asthecreationofpositiveincentives to facilitate start-up acquisitions in the form of an ‘Innovation Shield’.
If applied correctly, the new guidelines could, within these parameters, create a balanced framework that ensures effective merger control and the protection of competition, whilst at the same time promoting much-needed investment, innovation and the resilience and competitiveness of the European economy.
However, it is striking that not all the principles set out in the introductory chapters of Part I of the draft guidelines have been consistently implemented intheoperationalchaptersofPartII.Thisconcerns,forexample,thediffering standards of proof for establishing harm and efficiency gains, which are evident in the text despite the proclaimed symmetry between the assessment of harm and benefits. In particular, the additional requirements for demonstrating efficiency gains, which remain very strict, create an imbalance. Furthermore, the theories of harm used by the Commission to assess potential anticompetitive effects have been significantly expanded compared with the current guidelines – and not all of the proposed ‘new’ theories of harm are based on established and tried-and-tested case law that can be generalised. Without clear limits and guidance within the individual theories of harm, as well as necessarysafeharbours, wefearthatthenewguidelines –despitethepositive announcements in Part I – may lead to an increase in legal uncertainty and additional administrative burdens for merging companies. This would mean that the guidelines would achieve precisely the opposite of the objective of this revision, which is to send a clear signal to the markets in favour of mergers that promote innovation and investment.
Our comments below focus in particular on the points of criticism identified. We call on the European Commission to revise the draft guidelines, particularly with regard to the proposed requirements and the assessment of efficiency gains, as well as theexpandedtheoriesofharm.Theoverarching guiding principles in Part I should also shape the operational provisions in Part II.
It would also be of considerable assistance to businesses if the Commission were to include detailed case examples in the guidelines – rather than merely referring to existing case law in footnotes, as currently envisaged – comparable to its practice in the horizontal and vertical antitrust guidelines.
B.
Comments on the Draft
1. Benefits from scale (Chapter I.A.2)
We welcome the fact that the European Commission intends to take the significance of procompetitive scale into account as an important factor in its assessment. In the context of international competition, Europe needs a forward-looking merger control regime that promotes and protects competition in the single market, whilst also considering the competitiveness of European companies. Economies of scale play a significant role here, as does taking global market conditions into account. Economies of scale can have a positive impact on boosting innovation, investment or resilience, which also benefits consumers. In global competition, they are often essential for being able to compete with major international players. The Commission should bear in mind that even companies already operating in global markets may require additional economies of scale to maintain their competitive position against competitors expanding globally. However, the pro-competitive view of scale should not be limited to global markets alone. Economies of scale resulting from mergersthat primarily affect the internal market or national markets can also have positive effects on innovation and investment
2. Relevant parameters of competition (Chapter I.B.1)
In para. 20, the Commission also explicitly recognises non-price-related and longer-term aspects such as investment, innovation, capacity, sustainability, resilience and security of supply as possible relevant competition parameters. This represents a clear step forward compared with the approach of the previous guidelines, which focused primarily on immediate effects on consumer prices, and we welcome this development.
3. Standards of proof and evidence (Chapter I.B.3)
The standard of proof that the parties involved in a transaction must meet with regard to efficiency gains should be the same as the standard that the Commission must meet in order to substantiate its theory of harm. Although para. 26 provides for this in principle by setting the ‘more likely than not’ standard, Chapter II.C nevertheless retains the strict criteria and tests for proving efficiencies set out in the current guidelines The same standard (‘more likely than not’) should be applied consistently to both harm and benefits.
More generally, the question arises as to whether the burden of proving efficiency gains should really rest solely with the merging parties. In accordance with the principles of sound administration, the Commission must, in its own investigation, also take into account circumstances that are favourable to the parties. In the ‘Consten and Grundig’ case (C-56/64 and C-58/64, p. 347 et seq.) the ECJ expressly held, with regard to Article 101(3) TFEU, that the Commission must not confine itself to requiring from undertakings proof of the fulfilment of the requirements for the grant of the exemption but must, as a matter of good administration, play its part, using the means available to it, in ascertaining the relevant facts and circumstances. The same should apply mutatis mutandis to merger control. In its investigation and assessment, the Commission should carry out an objective and holistic examination of the positive and negative effects of the merger, rather than, as has been the case to date, merely identifying potential harm to competition and taking the positive effects into account only in the context of the efficiency defence put forward by the undertakings involved. For instance, the Commission routinely uses its investigative powers to gather evidence of harm from third parties, but does not do so in relation to efficiency claims; where evidence relevant to efficiency lies with third parties, the Commission should be obliged to request it. Otherwise, in practice,it will bedifficult forthemerging parties to provide evidence comparable to the information that the Commission can obtain through extensive requests for information.
In para. 30, the Commission expressly rejects consistency with its own decision-making practice by stating that it is ‘not bound by findings made in a previous case, even where the markets concerned are similar or identical’. ThisstatementispuzzlingandcontradictsthespiritandpurposeoftheGuidelines, which are precisely intended to ensure legal certainty, predictability and transparency, and to limit the Commission’s wide discretion. Para. 30 should therefore be deleted or fundamentally reworded to confirm that previous decision-making practice will be followed unless there is a reasoned justification for deviating from it. On a positive note, however, the Commission explainsinpara.30that, whenconsultingthirdparties,ittakestheireconomic incentives and interests into account. Overall, documents used as evidence –including internal documents of the merging undertakings – should always be assessed in the context in which they were created, in a similar way to how the Commission already recognises this approach with regard to evidence from third parties. The draft should explicitly extend this approach to the parties’ internal documents.
According to para 31, the Commission may base its assessment on a single piece of evidence if its probative value is undoubted. The statement in para. 31 appears to contradict the CK-Telecoms judgment (C-376/20 P), which requires a ‘sufficiently cogent and consistent body of evidence’ (see also para. 26). The possibility of relying on a single document should therefore be expressly classified as an exception. In such cases, it is also particularly importanttoassessthedocumentrelieduponas evidenceinthecontextinwhich it was produced.
4. Counterfactual (Chapter I.B.5.1)
The draft guidelines provide for significant differences in the counterfactual analysis of harms and benefits. A SIEC is measured against the most likely scenario without the merger, whilst efficiency gains are measured against a significantly more restrictive reference framework, which includes hypothetical, unpursued agreements between the parties as alternatives to the merger. This creates a systematic bias against the identification of efficiency gains, which is at odds with the CK Telecoms judgment, which requires the Commission to determine which causal chains are ‘most likely’. The final guidelines should stipulate that a single counterfactual applies to both efficiencies and harm; in both cases, this should compare the most likely scenario with and without the merger. The reference to ‘absent efficiencies’ in para. 37 must be deleted.
5. Failing firm (Chapter I.B.5.2)
The conditions for a failing firm defence remain too restrictive in the draft guidelines. Greater flexibility should be provided for situations in which a firm will not contribute effectively to competition in the foreseeable future. The Commission should introduce a more dynamic counterfactual analysis and take into account the situation of financially distressed firms across the entire spectrum, for example by considering shrinking markets, ‘flailing firms’ and firms at risk of insolvency, rather than limiting the analysis to the binary question of imminent market exit.
6. Market power (Chapters II.A and II.B.2.1)
a) Safe harbours and presumption rules
Safe harbours are an important tool for providing legal certainty to businesses, clarifying grey areas and ensuring that cases where there is no threat to competition are excluded from a time-consuming review from the outset. The Commission should incorporate the existing safe harbours from the Guidelines on the assessment of horizontal and non-horizontal mergers –which have been significantly weakened or omitted altogether in the draft guidelines – into the final version of the new guidelines. Currently, the only reference to this is in para. 129, which states that certain market structures are ‘indicative’ that a merger between competitors does not pose a risk of creating a SIEC. The wording in the guidelines currently still in force (‘the Commission is unlikely to identify competition concerns’) appears significantly stronger in this regard. The 30% safe harbour for vertical and conglomerate mergers has been removed entirely and should be reinstated, as should the safe harbour for mergers with a post-merger HHI above 2,000 and a delta below 150, as set out in the guidelines on the assessment of horizontal mergers.
Currently, rather than the safe harbours described, the draft guidelines actually provide for stricter requirements by introducing, in para. 62 in conjunction with para. 127, new market share and HHI thresholds; if these are exceeded,themergingpartiesmustprovide‘substantialevidencepointingaway from a SIEC’. A de facto presumption of a SIEC based on static thresholds carries the risk of systematically overestimating anti-competitive effects and contradicts the dynamic approach pursued elsewhere in the draft guidelines. The presumption in para 127 should be deleted; otherwise, any theory of benefits for mergers involving larger undertakings would lose its significance, which directly contradicts the recognition of pro-competitive economies of scale.
Despite the reference to Recital 25 of the Merger Regulation in footnote 179, itremainsunclearwhatspecificweightisattachedtotheMergerRegulation’s notion that many oligopolistic markets can exhibit a ‘healthy degree of competition’. The systematic emphasis on market power as a potential risk factor could give the impression that oligopolistic structures tend to be classified as problematic (para. 113)
b) Dynamic competitive potential
We welcome the fact that the Commission intends to take greater account in future of more dynamic competition indicators, such as investment and innovation intensity. These provide insight into how competition may develop in the long term and what incentives exist for technological progress. With regard to investment-related factors, however, the focus should not be solely on a company’s business model (para. 82). A company’s dynamic development also depends, amongst other things, on its financial strength, access to capital markets andprofitability.Dynamiccompetitivepotentialshouldbe an integral part of the assessment wherever market outcomes are determined by investment and innovation dynamics.
c) Market entry and expansion
In the context of market entry and expansion, the two-year benchmark set out in para. 96 is unsuitable for markets with long investment and implementation cycles; the timeframe should be aligned with that used to assess potential competition.
7. Theories of harm (Chapter II.B)
The European Commission is also using the reform of the Merger Control Guidelines to fundamentally revise and update the chapter on potential anticompetitive effects and theories of harm. Codifying the case law of the last 20 years and updating the guidelines on key theories of harm is reasonable and, in principle, also increases predictability and legal certainty for businesses. It is striking, however, that alongside tried-and-tested theories of harm, the Commission has also included many ‘new’ theories in the draft, regarding to which there have so far been few or only very specific case decisions. In this way, important cases with key findings that are worthy of generalisation are placed on the same footing as purely isolated cases and exceptional circumstances, to whichtheguidelinesattachunduesignificance. Examples include the consideration of labour market effects, minority shareholdings, the loss of investment competition or access to commercially sensitive information (see also the comments on individual theories of damage below).
It should be noted that the European Commission’s ability to develop and apply new theories of harm that go beyond the Guidelines in the future is in no way restricted. However, the Guidelines should only lay down criteria for
those theories for which there are already sufficiently established principles – and, ideally, principles that have already been recognised by the courts. New theories of damages for which there is not enough case law or only very specific case decisions that cannot be generalised should, by contrast, not be included in the Guidelines at this stage, but should, where appropriate, be the subject of a future revision, provided they have become established by that time.
New theories of harm must always be based on sound economic evidence of significant adverse effects on competition. The ‘effects-based approach’ should always play a key role in this regard, placing the economic effects at the centre of the analysis. With a view to the future development of new theories of harm, the introduction of a benchmark modelled on the US Daubert standard would ensure that all economic analyses – particularly in the case of complex theories of harm – are based on sound methodology, verifiable hypotheses, principles peer-reviewed by experts and a clear understanding of error rates, thereby strengthening the credibility of the Commission’s assessments.
A further point of criticism regarding the chapter on harm theories is that the theories listed are potentially applicable to all mergers, regardless of sector, size or market context. We see a risk here that, in practice, the Commission will carry out a ‘check-the-box’ assessment in which every harm hypothesis is examined.This would makemerger control an unduly burdensome process for companies, without creating any real added value for competition. The final guidelines should better clarify the circumstances under which each theory is applicable and confirm that the extension of the harm theories does not oblige the parties to provide information on every hypothetical theory, unless it is demonstrably relevant to the transaction. The introduction of further safe harbours, such as the proposed ‘Innovation Shield’ in Chapter II. B. 4.3, for the various theories of harm would also make an important contribution to greater legal certainty for businesses.
a) Labour market effects (Chapter II.B.2.4)
We reject the inclusion of labour market effects in para.160–162. To date, there is insufficient case law in the EU on this matter to justify their inclusion in the guidelines. The Commission should instead focus the guidelines on established and tried-and-tested theories of harm. The draft appears, particularly in para. 161, to propose a problematic and unjustified paradigm shift by potentially giving the interests of workers priority over the welfare of down-
stream customers and consumers. In doing so, the draft is based on the implicit assumption that workers in the EU are not sufficiently protected. This section fails to take into account the different collective bargaining systems and employee protection laws that prevail across the EU and within national legal systems. The structural and regulatory frameworks of labour markets in the EU differ fundamentally, for example, from those in the US and provide employees with a degree of countervailing power for which there is no direct equivalent in the US. Existing regulations that protect workers from the potentialnegativeconsequencesofcorporatemergersinclude,forexample,provisions safeguarding employees in the event of mass redundancies, transfers of undertakings and restructuring, as well as the strong participation rights of employee representatives. There is no need to include these aspects additionally in the competition law assessment. Furthermore, the draft does not take sufficient account of the fact that employees can also benefit from mergers, for example when collective bargaining takes place on the distribution of profits arising from the merger between management and employees.
There is a risk that incorporating labour market effects into the assessment will result in additional documentation and audit requirements, as well as a greater administrative burden for companies, including the need to define relevant labour markets and the difficulty of quantifying the effects on wages, working conditions or worker mobility.
Shouldthisconsiderationneverthelessberetained,factorsthatcounteractany potential bargaining power on the part of employers – such as collective bargaining coverage, collective representation of interests and existing protective mechanisms under labour and social legislation – must be included in the assessment, as envisaged in para. 162. Furthermore, the scope of application must be clearly limited and restricted to specific exceptional cases in order to avoid disproportionate burdens on businesses.
b) Minority shareholdings (Chapter II.B.2.4)
The concept of minority shareholdings should not be treated as a standalone theory of harm. Whilst it may be a relevant factor in the overall assessment of market dynamics and market power, its consideration should be strictly limited to cases involving significant shareholdings and clear evidence of actual influence or the flow of information between competitors. The proposed 5%safeharbourthresholdinpara.165istoonarrowtoprovidelegalcertainty inpracticeandriskscapturingevenpurelypassiveinvestments,whichfurther
increases complexity without bringing any clear benefit to competition. It should be raised significantly.
c) Loss of investment and expansion competition (Chapter
II.B.3)
Under para. 170, a merger may now be prohibited on the grounds that it reduces the merged entity’s incentives to invest – even if all planned investments are carried out as intended. This introduces a de facto presumption of reduced investment incentives in concentrated markets and is cause for concern, as theoretical incentives are given greater weight here than actual effects. Furthermore, the draft does not specify the exact threshold of reduction in incentives that must be reached, thereby leaving open the possibility that even minimal effects could trigger intervention. This deviates from a sound principle of harm, which requires a direct, tangible and causally linked negative impact. The Commission is moving away from this understanding and appears to regard even mitigated or speculative effects as sufficient grounds for intervention, thereby lowering the bar for what constitutes ‘harm’. This is particularly problematic, as investment incentives naturally also exist and are assessed in situations where there is no market power. If this chapter remains in the final version of the Guidelines, it should be revised to define the theory of harm more clearly and to align the assessment closely with the Ability, Incentives and Effects Framework.
This section of the guidelines should also recognise that the elimination of competition between the merging parties does not necessarily lead to worse outcomes. It should therefore require a case-by-case assessment of whether a party’s ability to invest is impaired, whether the restrictive effect on competition would diminish over time, and whether the merger enables investments that would otherwise not take place.
d)
Loss of innovation competition (Chapter
II.B.4)
It is correct that, in relevant cases, the Commission should increasingly take into account in its assessment not only the expected positive but also the potential negative effects of a merger on future innovation developments However, disproportionate weight is attached to the theory of harm based on the loss of innovation competition as set out in the draft. Its broad definition, according to which any discontinuation of R&D projects or products may give rise to concerns, carries the risk that, in future, every merger assessment
will turn into a speculative investigation of innovation effects. The draft appears to allow concerns to be raised even where there are no traditional overlaps, such as existing product overlaps, product/R&D overlaps or R&D/R&D overlaps. This broadapplication,as indicatedin para.183,could significantly expand merger control in innovation-intensive sectors such as technology, pharmaceuticals and the life sciences. There is a considerable risk that this approach will lead to comprehensive investigations into innovation effects becoming standard practice, even where there is no genuine added value for competition. Such investigations would place a considerable burden on the merging companies. Para. 183 and 192(b) also raise the practical question of how companies are supposed to be aware of their competitors’ or third parties’ R&D projects in a manner compliant with competition law if these are not publicly known.
We welcome the fact that the Commission intends to create positive incentives and facilitate start-up acquisitions through a new ‘Innovation Shield’, particularly in contrast to the ‘killer acquisitions’ that have been much discussed in recent years. This can support scale-up strategies and industrial innovation ecosystems. The pooling of corporate resources can be a decisive factorinboostingresearchactivities,enhancingEurope’sinnovativecapacity and strengthening the competitiveness of European companies. With regard to the individual conditions of the Innovation Shield, it would be helpful if the Commission could explain in more detail in para. 192(b) and (e) the criteria it uses to determine ‘size’ in this context (‘not the largest firm in the relevant market’) – in particular, whether this is based exclusively on market share, or whether other factors are taken into account. Furthermore, it should be examined whether the requirement in para. 192(b) and (c), stipulating that there must be at least three other companies with comparable R&D projects, restricts the scope of application too much.
e) Loss of potential competition (Chapter II.B.5)
The Guidelines should provide for the same time horizon for the assessment of potential competition as for the assessment of market entry and expansion – this is not currently the case; unlike market entry and expansion, potential competition does not have to occur ‘in the near future’ (para 93, 96).
f) Entrenchment of a dominant position (Chapter II.B.7)
Before codifying the entrenchment of a dominant position as a standalone theory of harm, the decision in the Booking/eTraveli case (M.10615), which is currently pending before the ECJ, should be awaited, as it may alter the Commission’s future assessment criteria. More generally, it is open to question whether the entrenchment of a dominant position should in fact be listed as a standalone theory of harm, or whether it should rather be treated as an assessment criterion and a possible aggravating factor in market foreclosure cases. Further details are also required regarding what the Commission considers to constitute a significant entrenchment. Otherwise, the generalisation of this theory – including beyond digital markets – without the necessary legal certainty poses a significant risk to companies wishing to expand into neighbouring markets.
g) Coordination (Chapter II.B.8)
Inpara.268,theCommissionexplainsthatpreviouscartelinfringementsconstitute a strong indication that a market is susceptible to coordination effects. This point is understandable,but thequestionarises as to thetimeperiod over which such terminated and fined cartels should remain relevant in the assessment. It would be helpful if the Commission could provide further details on this point.
h) Access to commercially sensitive information (Chapter II.B.9.1)
In Chapter II.B.9.1, the European Commission relies on an incomplete and one-sided interpretation of its decision-making practice in order to significantly expand the scope of a harm theory that has not yet been recognised by the courts and – until a recent case from 2026 – was not regarded by the European Commission as decisive for establishing a SIEC.
In the current Guidelines on the assessment of non-horizontal mergers (para. 78), access to confidential business data constitutes a sub-theory within the context of vertical/conglomerate mergers and, in certain cases, forms part of the European Commission’s market foreclosure assessment. The draft guidelines now elevate this to a standalone form of harm to competition, on a par with established theories of harm such as market foreclosure or coordination. The European Commission provides no justification as to why, and in which cases, this type of impact should take centre stage. Furthermore, the presen-
tation in Chapter II.B.9.1 does not provide a balanced interpretation of the EuropeanCommission’sdecision-makingpractice.Itfailstotranslatethekey points identified in the various decisions into a normative rule-exception framework; instead, the focus is primarily on a recent, very specific case: UMG/Downtown (M.11956). The facts of this single case do not permit the derivation of a general approach, let alone a theory of harm, with regard to access to commercially sensitive information. As regards the other case decisions listed in Chapter II.B.9.1, the European Commission’s findings ultimately gave no cause for concern regarding access to commercially sensitive information in most cases. Chapter II.B.9.1 therefore overestimates the relevance and potential harm arising from this issue. Access to commercially sensitive information should continue not to be listed as a separate theory of harm, but should be examined as a sub-point within the context of possible market foreclosure.
Furthermore, the European Commission does not address fundamental aspects of its previous decision-making practice in the draft guidelines, namely the assessment of an undertakings’ ability and incentive to access commercially sensitive information. In line with the European Commission’s approach to assessing harm scenarios relating to market foreclosure, and in accordance with the decision-making practice of the European Commission set out in Chapter II.B.9.1, the European Commission must, as a matter of principle, assess (i) whether there is the ability to access commercially sensitive information, (ii) whether there is an incentive to access commercially sensitive information, and (iii) whether access to commercially sensitive information would significantly impede effective competition. However, the current draft of Chapter II.B.9.1 does not mention (i) and (ii) and, for this reason alone, requires revision.
A party’s ability and incentive to access commercially sensitive information are influenced and restricted by regulatory, contractual and other legal constraints. According to para. 285 of the draft guidelines, the European Commission does indeed ‘consider’ legal limitations. However, this wording suggests that the European Commission does not attach any particular relevance and/or significance to such restrictions. This sceptical attitude towards regulatory restrictions and contractual safeguards can also be inferred from the UMG/Downtown decision. However, by generalising such a dismissive stance, the European Commission ignores market realities and contradicts its own findings in earlier decisions, in which it not only took such restrictions into account but, rather, emphasised their significance and validity, and in
most cases considered them sufficient to preclude the ability and/or incentive to exchange information (see, for example, Novo Holdings/Novo Nordisk/Catalent, M.11486, para. 174 et seq., Rolex/Bucherer, M.10301, para. 112 et seq., NVIDIA/Mellanox, M.9424, para. 284 et seq.). Particularly in sectors characterised by vertical integration or conglomerate structures, contractual safeguards and ‘firewalls’ constitute an established, widely used and tried-and-tested means of preventing unauthorised information sharing (see, for example, Precision Castparts/Titanium Metals, M.6765, para. 202). The European Commission must explain why such safeguards are to be regarded as insufficient in exceptional cases. Furthermore, in para. 284, it should be added that, in certain situations, the exchange of information may also have pro-competitive effects.
8. Efficiency gains (Chapter II.C)
a) Burden of proof and standard of proof
In our view, the Commission’s new focus in its draft guidelines on taking efficiency gains into account, and the early consideration of a ‘theory of benefit’ on an equal footing with the ‘theory of harm’, represents one of the most significant positive innovations of the draft. However, this approach has not been consistently implemented in this chapter of the new guidelines. The standards of proof for demonstrating the ‘theory of benefit’ and the ‘theory of harm’ must be applied consistently throughout the guidelines, using the same standard (‘more likely than not’).
As already outlined in Chapter 3 above, the Commission should carry out an objective and holistic assessment of the effects of a merger on competition, in which efficiency gains need not be put forward solely by the parties, even though they will generally submit the most relevant evidence to demonstrate the positive effects of the proposed merger.
b) Remedies
The draft provides that efficiency gains must fully outweigh or offset the competitive harm (para. 339), rather than accepting that only a partial offset occurs and that the remaining harm can be remedied through commitments andremedies.Theguidelinesshouldexplicitlyrecognisethatefficiencygains must be taken into account when designing potential remedies, and that investment-based commitments – such as binding commitments to maintain or
increase R&D expenditure, capacity or infrastructure investment with verifiable KPIs – constitute a legitimate category of remedies capable of sufficiently safeguarding dynamic efficiencies. Once the final guidelines have been adopted, the Commission should also revise the notice on acceptable remedies to ensure the necessary consistency.
c) Verifiability
The principle set out in para. 31 that there is ‘no hierarchy’ between qualitative and quantitative evidence is undermined by the verifiability requirement in this chapter: efficiencies must be quantified as far as possible, and footnote 395 even makes quantification mandatory where the benefits and harms are of the same order of magnitude. The Commission has expanded the types of recognised efficiencies to include inherently qualitative categories – resilience, sustainability, innovation – only for footnote 395 to disqualify most of them again during the balancing phase. Where the Commission does not quantify the extent of the harm, the parties should not be subject to a higher standard of quantification for benefits. Conclusive qualitative evidence should suffice.
The implicit three- to four-year time horizon (footnote 380) is particularly unsuitable for capital-intensive sectors, where R&D programmes, infrastructure development and sustainability transitions regularly require time horizons of seven to ten years or longer.
It is very positive that the draft guidelines now explicitly recognise not only direct efficiency gains but also dynamic efficiencies that will only develop over time, thereby adopting a significantly more forward-looking perspective than the previous guidelines. However, with regard to the timeframe to be applied, the wording in para. 328 is puzzling, as it states that the effect of the dynamicefficiency gain must,‘inprinciple,materialiseshortly after closing’ Although the Commission subsequently acknowledges that a longer time horizon may also be applied, provided the efficiency gains remain demonstrable, the starting point for the assessment appears to be closely aligned with the assessment of direct efficiency gains. A clearer distinction should be possible here. Furthermore, the time required for the realisation of efficiencies should not be confused with the probability of their occurrence; these are two separate criteria.
d) Merger-specificity
Inpara. 310 (and para. 331),theCommission adheres to theprinciple –which in practice is very difficult to prove – that efficiency gains are recognised only if the claimed efficiencies could not also be achieved through less anticompetitive agreements between the parties. This transposes the requirement of Article 101(3) TFEU – an ex-post analysis – to merger control, which is carried out ex ante. This is required neither by the Merger Regulation nor by the courts. The Merger Regulation merely refers to simple causality – efficiencies ‘brought about by the concentration’ – and contains no condition of indispensability; where it intends to apply Article 101(3), it states this explicitly, as in Article 2(4) for joint ventures. Conversely, it follows that the principle of Article 101(3) does not apply to efficiencies arising from other mergers. In practice, it is very easy for the Commission to hypothesise an alternative here without proving its feasibility.
In order to achieve a truly consistent assessment with the underlying theories of harm, a uniform counterfactual test should instead be introduced: efficiencies are merger-specific if they would not occur in the most likely scenario without the merger, applying the ‘more likely than not’ standard that also applies to harm. Furthermore, the same ‘more likely than not’ counterfactual would also allow for a symmetrical balancing of harm against efficiency gains, in line with para. 347, which states that ‘the effects of a merger must be made comparable’.
Should the current standard nevertheless be retained – even though this is not requiredeitherbytheMergerRegulationoronthebasisofcaselaw–Chapter II.C.1.3 must at least be supplemented with key balancing factors. For instance, the Commission currently fails to recognise sufficiently that theoretically conceivable alternatives, such as contractual arrangements and cooperation, are not feasible in practice or do not necessarily lead to equivalent efficiency gains. Furthermore, the transaction costs that would arise, for example, due to complex negotiations or the monitoring and enforcement costs required in the event of cooperation, have so far been disregarded in the guidelines. Even if an alternative to a merger were theoretically conceivable, it does not follow that it would be equivalent in practice.
Many improvements work best when companies fully merge their activities and align their business objectives. A merger involves a clear and definitive combination of the resources of the companies involved. A cooperation, by contrast, is subject to greater risks and may also relate only to certain aspects,
specific projects or a specific timeframe. Furthermore, a cooperation requires a self-assessment under competition law, whereas a merger provides legally certain regulatoryapproval.Thedecisivefactorshouldbewhetherthemerger offers a realistic means of achieving efficiency gains, not whether it is the only possible approach.
e) Consumer benefits
Efficiency gains should also be taken into account outside the relevant market, so that merger control decisions can contribute to the achievement of broader EU objectives that benefit society as a whole, such as competitiveness, sustainability and resilience. In this regard, the guidelines continue to provide for an overly narrow framework. Whilst the Commission acknowledges that efficiency gains can also benefit society as a whole (para. 300, 315) and even refers to ‘out-of-market’ efficiencies in para. 357, it maintains that, in order to be recognised, the efficiency gain must benefit ‘substantially the same consumers’ who would also be affected by the potential harm to competition (para 315, 334, 354 et seq.). Here, the Commission is missing an important opportunity to actually shape the new guidelines in the light of existing common European objectives. By imposing this restriction, it erects a barrier within the guidelines which, in many cases, once again excludes many of the aspects positively highlighted in Part I – such as sustainability, resilience, innovation and security of supply – which, by their very nature, benefit consumers across markets and Member States, thereby disadvantaging those consumers who would benefit from these ‘out-of-market’ efficiencies. We advocate recognising genuine ‘out-of-market’ efficiencies in the guidelines – whether these actually outweigh the identified competitive disadvantages for consumers in the relevant market must be decided on a caseby-case basis as part of a proportionate balancing test.
9. Balancing of Interests (Chapter II.C.3)
To emphasise more clearly that the Commission regards theories of harm and benefit as equivalent and weighs them against one another, the discussion on balancing should be moved to a new, standalone Chapter II D rather than remaining merely as a sub-section within the chapter on efficiency – the current structureimplies that theCommission first assessestheharm andregards potential efficiencies merely as a possible defence for the undertakings, whereas the new approach set out in the Guidelines should be based on a holistic assessment in which potential harms and benefits are assessed on an equal footing from the outset
About the BDI
The BDI represents the interests of German industry to political decisionmakers. In doing so, it supports companies in global competition. It has an extensive network in Germany and Europe, across all key markets and within international organisations. The BDI ensures political support for international market expansion. It also provides information and economic policy adviceon all issues relevant to industry.TheBDIis theumbrellaorganisation for German industry and industry-related service providers. It speaks on behalf of 38 sector associations and more than 100,000 companies employing around eight million people. Membership is voluntary. Fifteen regional offices represent the interests of the business community at regional level.
Legal notice
Federation of German Industries (BDI) Breite Straße 29, 10178 Berlin
www.bdi.eu
T: +49 30 2028-0
EU Transparency Register: 1771817758-48
Lobbying register number: R000534
Contact
Nadine Rossmann
Senior Representative
Legal Affairs and Tax Department
+32 2 792-1005
n.rossmann@bdi.eu
Dr Ulrike Suchsland
Senior Representative Legal Affairs and Tax Department
+49 30 2028-1408
u.suchsland@bdi.eu
BDI document number: D 2329
