The European Commission (EC) has long taken a rigorous approach to M&A, placing consumer interests at the center of its competition and antitrust decisions, but that could be changing.

The EC is due to put forward draft reforms to merger rules that could lead to the most far-reaching overhaul of antitrust enforcement in the continent in more than two decades.

Initial proposals, seen by the FT, call for competition regulators to place a greater emphasis on “innovation, investment and resilience of the internal market” in merger reviews.

Building national champions in a polarized world

The proposals stem from a view among European policymakers that the region must form bigger companies that can compete with rivals in the US and China, and have the bandwidth to drive investment and innovation at scale.

Corporate dealmakers have been lobbying Brussels for years to make merger controls more flexible, and in his seminal report on the future of European competitiveness, Mario Draghi called for policymakers to facilitate consolidation in strategic industries, such as telecoms and defense, to realize economies of scale and increase capital expenditure on core infrastructure, research and technology.

The draft proposals represent a direct response to these calls, and if implemented, will mark a watershed moment for European M&A dealmaking.

Mega deals that have been blocked or abandoned in the past, like the unsuccessful attempt by Siemens and Alstom to merge their mobility businesses in 2019 and the prohibition of Booking.com’s acquisition of eTraveli in 2023, could move back into the frame, as could other M&A that hasn’t progressed because of antitrust clearance risk.

The companies most likely to benefit from more forgiving competition reviews will include those operating in disparate but capital-intensive industries such as telecoms, banking, defense, energy and transport. According to Saxo, these are sectors where regulators have pushed back against consolidation previously, even when it is clear that scale benefits competitiveness and investment.

Still questions to answer

As things stand, the proposals to reform merger controls are still formative and could change as they move through the legislative process.

Even at this early stage, there are already rumblings of opposition among some senior policymakers, who are unconvinced that easing controls will improve competition or investment. Member states will also be sensitive to the risk that in consolidated industries larger entities will hold greater pricing power, to the detriment of customers and consumers.

Saxo notes that dealmakers will also seek more clarity around the specific objectives the EC wants to achieve through competition reform. Is the plan to allow more mergers to progress naturally over time? Or is the aim to prioritize consolidation in specific industries, like defense and telecoms, where pan-European cohesion has obvious benefits.

The new merger guidelines are due for formal publication in the early summer. For dealmakers with merger plans on file, the reforms could redefine not only the deals that are cleared, but the deals that are attempted in the first place.

What does this mean for dealmakers?

For dealmakers, this should be read as a potential shift rather than a green light, with antitrust risk still central to deal viability. Scrutiny will persist, making early risk assessment, careful structuring, and proactive regulator engagement critical to execution.

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