Merger rules to favour scale and innovation, says EU competition chief
Teresa Ribera confirms consumer interest will no longer be main criterion in approving or rejecting corporate deals
Revamped EU merger rules will allow the bloc’s enforcers to take into account factors including scale, innovation and sustainability when approving or rejecting corporate deals, according to the competition commissioner.
Teresa Ribera told the FT that the EU wants to encourage “pro-competitive mergers that allow European players to grow and accelerate innovation and have the scale to be relevant players in global markets”.
The changes, first reported by the FT, would mark the most radical shake-up since the 2000s, when competition regulators put the effect of mergers on consumers at the heart of their decisions.
The new merger guidelines are set to be published in the coming weeks as part of efforts to revitalise Europe’s flagging economy in the race against global rivals such as China and the US. The updated rules are highly anticipated by executives and investors looking at future merger opportunities.
The telecom industry especially has been pushing for looser rules, with companies such as Orange and Vodafone arguing that restrictive merger rules are holding them back from growth in domestic markets.
A 2019 decision to block the merger of Germany’s Siemens and France’s Alstom has been cast as emblematic of the EU’s failure to allow the creation of “European champions”, in that case capable of rivalling China’s CCRC.
In “today’s global markets”, Ribera argued, it was important to give greater weight to long-term benefits such as innovation, resilience and sustainability, even if they take more time to materialise.
“We need to develop a firm defence against external chaos,” Ribera said, citing the importance of “enlargement of the scale of companies . . . to compete in global markets”.
The drafting of the updated guidelines, which serve as the framework antitrust rule book for all companies operating in the EU’s 450mn-strong consumer market, has pitted more corporate-friendly officials against those who believe consumer protection must remain the fundamental focus of merger decisions.
While Ribera, a Spanish socialist, stressed that “it is very obvious that price is still something very important for the industrials, for the consumers,” she said the bloc’s competition enforcers would take relevant benefits of a merger on the longer term more into account, as long as they were more than “wishful thinking”.
“It is important to provide sufficient evidence or at least probability of those benefits,” she added.
The bloc’s antitrust chief said the new framework would not only offer more clarity to companies but also encourage earlier discussions between companies and the EU’s competition regulators.
However, she cautioned that consolidation alone cannot solve Europe’s struggling economy and its much-vaunted but underperforming single market.
“It is a piece in a mosaic when thinking about competitiveness,” she said, pointing out that potential consolidation had to go hand in hand with the integration of the single market, as “one thing cannot substitute the other.”
Keeping the level playing field for companies remained key, she said. Ribera acknowledged a “strong temptation” to respond to global rivals who did not respect the global rules to do the same, but insisted the EU’s strength lay in complying and setting a rules-based global system while adapting its tools to new realities.
“We have very important leverage when saying if you’re interested to develop your business in this very interesting market that pays well for high-quality things, we have not only the opportunity but the responsibility to set the rules,” she said.
The upcoming merger guidelines coincide with the appointment earlier this week of Anthony Whelan, a former aide to European Commission president Ursula von der Leyen, as its new top civil servant for competition.
Ribera said it was vital to her that the new head of the bloc’s competition division was someone who knew competition, but also had experience beyond that field. “And someone I could trust and that I felt was respected by the team. The atmosphere of mutual trust was quite an important thing,” she said.