The European Commission has published draft Guidelines on the assessment of mergers under the EU Merger Regulation for public consultation, with comments due by 26 June 2026. This is the first comprehensive update of the EU’s substantive merger assessment framework since 2008. Digitalisation, industrial competitiveness, supply‑chain resilience and concerns about so‑called “killer acquisitions” now intersect in a single policy process with implications for the wider innovation ecosystem – including start‑ups, investors, incumbents and policymakers.
The legal backdrop
Recent case law has reshaped the jurisdictional context in which the draft Guidelines will operate. In Towercast (Case C-449/21, March 2023), the Court of Justice held that Article 21(1) EUMR does not prevent national competition authorities from examining non‑notifiable mergers under abuse of dominance rules, while setting a demanding standard for intervention. In Illumina/Grail (Joined Cases C‑611/22 P and C‑625/22 P, September 2024), the Court annulled the Commission’s acceptance of Article 22 EUMR referrals from national authorities that lacked competence under their own laws, narrowing the circumstances in which below‑threshold, nascent market transactions can be reviewed at the EU level without a national jurisdictional “hook”.
It should be noted that these jurisdictional developments fall outside the scope of the draft Guidelines, which address the substantive assessment of concentrations rather than the conditions for establishing jurisdiction.
Against this background, the draft Guidelines update the analytical framework for assessing whether concentrations result in a significant impediment to effective competition. The text consolidates developments in economics, case law and decisional practice over nearly two decades and seeks to reflect the shift towards innovation‑intensive and digitally enabled sectors. It does so by placing greater emphasis on R&D cycles, platform dynamics, global supply chains and the treatment of transactions involving start‑ups and other small innovative firms.
What the draft says: The main pillars
The draft Guidelines replace both the 2004 Horizontal and the 2008 Non‑Horizontal Merger Guidelines with a single consolidated instrument. Early sections underline that scale can play a positive role in competitiveness, that the global geopolitical and trade context has changed, and that the assessment of mergers should give “adequate weight to scale, innovation, investment and resilience as pro‑competitive factors” in markets where these dimensions are critical. Three themes appear particularly relevant from an innovation perspective.
– Scale and competitiveness: The Commission states that it “regards positively mergers that increase procompetitive scale while maintaining effective competition in the internal market.” Scale‑enhancing transactions combining complementary activities across Member States without creating significant overlaps are described as contributing to internal market integration and European industry’s ability to compete globally, especially in capital‑intensive and R&D‑intensive sectors. At the same time, the text underlines the need to distinguish the benefits of scale from increases in market power that may harm competitiveness or resilience;
– Innovation as a parameter of competition: Innovation is explicitly listed alongside price, output, quality, choice, capacity, investment, privacy, sustainability and resilience as a parameter of competition, among others. The draft dedicates specific sections to the loss of innovation competition – both “specific” (overlapping R&D pipelines or projects) and “general” (overlapping innovation capabilities or R&D organisations at industry level). The Commission signals that it will look beyond static indicators such as current market shares to assess how a transaction affects innovation rivalry, including where innovation cycles are long, or products are not yet on the market;
– The “innovation shield” – a framework for start-up and R&D acquisitions:A novelty is the “innovation shield” presented in Section II.B.4.3. Under this framework, the Commission will, in principle, not find a significant impediment to effective competition in relation to any theory of harm – including the loss of innovation competition, potential competition, entrenchment and foreclosure – where a transaction involves a small innovative company, including a start‑up, or an R&D project with dynamic competitive potential, provided certain conditions are fulfilled. The shield distinguishes five scenarios:
a) where none of the merging parties are active or expected to become active in the same relevant market, innovation space, or vertically/closely related market, the shield applies without additional conditions;
b) where an R&D project overlaps with the other party’s existing market activities, the shield applies if the merging parties’ market share does not exceed 40% (individually or combined) and at least three other firms have independent R&D projects with competitive potential similar to those of the merged entity. In the specific case of an acquisition of a start‑up by an incumbent, the acquisition may still benefit from the shield even if these thresholds are not met, provided the acquirer is neither the largest firm in the relevant market nor designated as a gatekeeper under the Digital Markets Act;
c) where the transaction leads to an overlap between the merging parties’ R&D projects, there must be at least three other firms with independent R&D projects of similar competitive potential – but no market share threshold applies;
d) where the transaction leads to an overlap between the merging parties’ R&D capabilities, the merging parties must not have a combined share exceeding 25% in the innovation space or at industry level; and
e) where the transaction combines one party’s R&D project with another party’s activities in an upstream, downstream or closely related market, the merging parties must not exceed a 40% market share in that related market – but the three project condition does not apply in this scenario. A start‑up acquisition can also benefit from the shield in this scenario if the acquirer is not the largest firm in the relevant market or a gatekeeper.
– “Killer acquisitions” | How the draft frames the issue: The draft Guidelines also address transactions sometimes labelled “killer acquisitions”, where an incumbent acquires an innovative rival and the acquired R&D project is discontinued, delayed or redirected, and “reverse killer acquisitions”, where the acquirer’s own project is scaled back post‑transaction. In assessing such scenarios, the Commission signals that it may consider an acquirer’s past conduct. Evidence of prior innovation suppression, discontinuation or delay, repositioning or reorientation of projects, plant closures, reductions in innovation targets or cuts to R&D budgets following previous acquisitions may all be relevant to the prospective analysis.
At the same time, the draft recognises that the analysis may need to take into account whether resources freed by reducing overlapping R&D workstreams would be redeployed into other innovation paths relevant to the same market or customer group. The overall approach thus combines scrutiny of potential innovation suppression with an assessment of alternative innovation trajectories and dynamic efficiencies.
Key issues for the consultation
Several aspects of the draft appear likely to attract attention from stakeholders before the 26 June deadline, notably:
I. Operability of the shield thresholds: The innovation shield hinges, in several scenarios, on the existence of “at least three” independent R&D projects with similar competitive potential. In nascent or rapidly evolving innovation spaces, establishing which projects are genuinely comparable may be challenging, raising the question of how far the shield will deliver legal certainty in practice.
II. Implications for venture capital funding:Forventure‑backed start‑ups in Europe, acquisition by an incumbent is the most common and often the most realistic exit route. If the regulatory environment is perceived as causing additional uncertainty or delay in such transactions, questions may arise as to whether this could affect early‑stage funding decisions, even where a formal safe harbour exists on paper.
III. Evidentiary expectations: The draft sets out an extensive list of factors relevant to dynamic competitive potential, including R&D expenditure, patent portfolios, track record in bringing innovations to market, size of the R&D organisation, access to key inputs and business model dynamics. For sectors characterised by incremental or highly disruptive innovation, it may be difficult for parties and investors to predict ex ante how these elements will be weighed.
Concluding remarks
The draft Merger Guidelines aim to adapt EU merger control to an economy in which competition increasingly unfolds through innovation, investment and scale rather than purely through static price competition. The innovation shield offers a structured and differentiated framework for transactions involving start‑ups and small innovative firms across five distinct scenarios. The explicit recognition of scale, dynamic efficiencies and resilience as relevant factors reflects a broader policy focus on competitiveness, while maintaining the central role of effective competition as the benchmark.
Whether the framework delivers on its objectives will depend on how it is applied in individual cases.
It will also depend on how national competition authorities – whose views on the relationship between scale, competitiveness and merger enforcement have not always aligned with the direction signalled by the Draghi Report – choose to engage with and apply the new analytical framework in referral and cooperation contexts, and whether they will voluntarily incorporate these principles when assessing concentrations that fall within their exclusive competence and do not reach the EU thresholds. The current consultation offers an opportunity for market participants, investors and advisers to engage with these questions and to inform how EU merger control will approach innovation‑driven transactions in the coming years.
