A New Playbook for M&A in the EU: The European Commission's Draft Merger Guidelines - 10 Key Changes

On 30 April 2026, the European Commission published draft merger guidelines that will replace both the 2004 Horizontal Merger Guidelines and the 2008 Non-Horizontal Merger Guidelines, consolidating them into a single analytical framework.

The new framework will also introduce significant changes that the Commission considers justified on the basis of the geopolitical and trade landscape and the economy's growing dependence on innovation, critical supply chains, and strategic industries. In particular, the draft guidelines stress that adequate weight must be given to scale, innovation, investment, and resilience as potentially pro-competitive factors, and it places greater emphasis on dynamic and long-term effects.

Although the guidelines are preliminary and not yet formally adopted, they are extremely important, as they give a clear signal regarding the direction the Commission intends to take in its merger assessment going forward. The draft guidelines are open for public consultation until 26 June 2026, and final adoption is expected in Q4 2026.

Key Changes

1. Explicit SIEC Standard and Theory of Harm / Theory of Benefit Framework

The legal test remains unchanged, i.e., does the merger significantly impede effective competition on the market (Significant Impediment to Effective Competition (SIEC) test)? However, the Commission explicitly states that its overall conclusion as to whether a merger gives rise to an SIEC will be reached on a "more likely than not" standard, based on an overall assessment of the facts and the evidence, including demonstrated efficiencies.

The draft guidelines introduce a structured dual framework: the Commission would articulate a "theory of harm" to explain how the merger would worsen competitive (price and non-price) parameters. Those parties relying on efficiencies would then articulate and substantiate a "theory of benefit," explaining how merger-specific efficiencies arise and benefit consumers.

2. Extended Competition Parameters: Privacy, Sustainability, and Resilience

The draft guidelines explicitly recognise that competition can be assessed according to both price and non-price parameters, and since many non-price parameters are difficult to quantify, the Commission retains a margin of discretion to weigh them in the overall balancing exercise. In a material departure from the 2004 and 2008 guidelines, the new draft lists privacy, sustainability, and resilience (including security of supply) as additional examples of non-price parameters. Other non-price parameters include output, quality, choice (including media and cultural diversity), capacity, investment, and innovation.

3. Updated Safe Harbours and Structural Indicators

For horizontal overlaps, the draft guidelines indicate when a merger between competitors is unlikely to give rise to a SIEC, i.e., when any of the following apply:

• • The combined market share is below 25%.
  • The combined market share is below 50% and there is an HHI delta below 150.
  • There is a post-merger HHI below 1,000.
  • There is a post-merger HHI between 1,000 and 2,000, with an HHI delta below 250.

Compared to the 2004 guidelines, the most notable change here is the addition of a combined market share below 25% as a standalone safe harbour, and the removal of the former category "HHI above 2,000 and a delta below 150."

These thresholds remain indicative only: the Commission emphasises that structural metrics are not determinative and that qualitative factors, particularly in dynamic or innovation-driven markets, may point to harm even where thresholds are not exceeded.

4. Innovation: Detailed Framework and New "Innovation Shield"

The draft guidelines provide a detailed framework for assessing loss of innovation competition, distinguishing between loss of specific innovation competition (e.g., overlapping R&D projects with risk of discontinuation, delay, or redirection) and loss of general innovation competition (e.g., overlapping innovation capabilities at industry level).

A significant new addition is the "innovation shield:" where an acquisition involves a small innovative company, a startup, or an R&D project, the Commission will generally not find that there is an SIEC in relation to any theory of harm (including loss of innovation, (potential) competition, entrenchment, or foreclosure), provided certain conditions are fulfilled. These conditions include the absence of overlap in the same or closely related markets or innovation spaces, or, in cases where there is an overlap, criteria based on market share thresholds and the existence of at least three independent comparable R&D projects. Specific considerations exist where the acquirer is a gatekeeper under the EU Digital Markets Act (DMA).

5. Labour Markets: Explicit Assessment of Monopsony/Oligopsony Effects

In a significant first, the draft guidelines explicitly treat harm in purchasing markets, including labour markets, as capable of producing a SIEC. The Commission will assess whether a merger creates or strengthens monopsony or oligopsony power over labour, potentially leading to lower wages or worse working conditions, including lower mobility for workers. This may result in downstream harm, such as higher prices, lower quality, or reduced choice. The draft guidelines note that countervailing worker power, including collective bargaining, and applicable social and labour regulations may limit the impact of the merger.

6. Efficiencies: Elevated to a "Key Role"; Direct vs. Dynamic Efficiencies

The draft guidelines explicitly state that demonstrated efficiencies will play a "key role" going forward, signalling a genuine shift in emphasis compared to the 2004/2008 guidelines, where efficiencies were treated primarily as a defensive argument.

The draft guidelines introduce a distinction between direct efficiencies, which result directly from the merger (e.g., cost savings, quality synergies) and dynamic efficiencies, which increase the ability/incentive to invest and innovate (e.g., scale, sustainability, and resilience-related benefits). Both categories of efficiencies must remain verifiable, merger-specific and beneficial to consumers, with detailed evidentiary expectations including quantification where reasonably possible and reliance on contemporaneous internal documents and business plans.

7. Coordinated Effects: AI and Algorithms as Explicit Facilitators

The draft guidelines restate the coordinated effects framework, which covers both tacit coordination and the stabilisation of existing coordination, and extend it explicitly to non-price parameters such as capacity, innovation and investment. Notably, the draft guidelines flag that large datasets, AI, machine learning and algorithms, including common external pricing providers, may facilitate coordination by enhancing monitoring and observability. It further recognises that coordination may occur even in growing or dynamic markets, including coordination to delay product launches or reduce investment levels.

8. Vertical and Conglomerate Mergers: Digital Mechanisms and Resilience Integrated

The draft guidelines retain the established foreclosure framework, which covers input, customer, and conglomerate foreclosure, and apply the cumulative ability/incentive/effect test. The new draft expressly enumerates mechanisms of particular relevance in digital and technology markets, including restricting access to data, interoperability restrictions, degraded post-sale services, preferential access, and impeding rivals' pipeline products. Dynamic foreclosure strategies aimed at entrenching or strengthening market power over time through self-reinforcing scale, data, or network effects are also expressly recognised as a theory of harm.

9. Minority Shareholdings and Common Ownership: Explicit New Framework

The draft guidelines introduce a new framework for assessing non-controlling minority shareholdings as a source of competitive harm. Where one of the merging firms holds a non-controlling minority shareholding in a competitor, the merger may reduce competitive pressure between the merged firm and that competing firm, for instance, where the shareholding gives rise to financial interests, influence, or information flows that weaken the incentives of both firms to compete. In conducting this assessment, the Commission will consider the size and nature of the shareholding, the formal rights attached to it (such as board representation, veto rights, or access to commercially sensitive information) and the overall degree of influence it confers. As a practical de minimis rule, minority shareholdings below 5% will not be treated as a standalone theory of harm, unless accompanied by additional rights or links that could give rise to competition concerns.

In addition, the draft guidelines explicitly recognise common ownership, i.e., where the merging firms and their rivals are minority-owned by the same legal or individual persons, such as institutional investors, as a contributing factor to reduced incentives to compete. In such circumstances, standard market share and concentration measures tend to underestimate the expected effects of the merger, and the new guidelines would allow them to be adjusted accordingly.

10. Member State Interventions: New Guidance under Article 21 EUMR

The draft guidelines introduce a dedicated section on Article 21 of the EU Merger Regulation (EUMR), clarifying when and how Member States may take measures to protect legitimate interests in mergers of EU dimension. Member State measures must (i) pursue a legitimate interest and (ii) be compatible with the general principles of EU law, including being suitable and proportionate to the interest pursued. As a result, measures that effectively prohibit a merger, whether legally or de facto, or that cause its abandonment through unduly lengthy regulatory review processes or unjustified conditions will now be more likely to be found in violation of Article 21(4) EUMR. Public security, media plurality, and prudential rules (in the financial sector) are expressly recognised as legitimate interests. Member States may also invoke other legitimate interests not covered by the EUMR but must clearly identify the specific risks that their measures intend to prevent and bear the burden of demonstrating compliance with the substantive and procedural obligations in Article 21 EUMR and the Treaties.

What Does This Mean for Your Transactions?

• • Prepare an efficiencies narrative early. Given the elevated role of efficiencies, parties should invest in a structured, evidence-based “theory of benefit” from the outset that includes reference to dynamic efficiencies such as innovation and investment benefits, and is supported, where feasible, by contemporaneous documents and robust quantification.
  • Expect broader information requests. The Commission intends to assess competition according to privacy, sustainability, and resilience parameters, i.e., not just according to price. Parties should anticipate requests for data and analysis of non-price competitive dynamics.
  • Leverage the innovation shield where applicable. Acquisitions of startups or small innovative companies may benefit from a clearer pathway to low-risk assessment under the new innovation shield.
  • Take structural indicators as a starting point, not a safe harbour. The indicative thresholds (e.g., combined market share below 25%) provide useful first-pass screens but do not preclude substantive scrutiny, particularly in innovation-driven, concentrated, or fast-moving markets.
  • Assess labour market effects. In labour-intensive sectors or transactions involving specialised or localised workforces, parties should assess and document competitive effects on the buying side of the labour market, alongside the traditional product-market overlaps.
  • Proactively address digital foreclosure theories in vertical and tech deals. Parties should assess data access, interoperability, ecosystem leverage, and dynamic entrenchment risks early and be prepared to address both the standard ability/incentive/effects framework and the resilience dimension.
  • Conduct early screening for minority shareholdings and common ownership. Where one of the merging firms holds a non-controlling minority shareholding in a competitor, or the merging firms and their rivals are minority-owned by the same persons, incentives to compete may be reduced, and standard concentration measures may therefore need to be adjusted accordingly.
  • Assess Member State intervention risk in cross-border transactions. Where a transaction may touch on public security, media plurality, financial stability, or other asserted national interests, parties should assess the risk of Member State intervention under Article 21 EUMR and be prepared to challenge measures that are disproportionate or amount to a de facto prohibition.