Merging for Competitiveness: Scale, Resilience, and the Promise of a Theory of Benefit in EU Merger Review

The assessment of efficiencies has been among the most contested topics in the review of the European Commission’s Merger Guidelines. Under the existing framework, efficiency claims have proved exceptionally difficult to sustain: the three-pronged test, requiring consumer benefit and pass-on, merger-specificity, and verifiability, has recognised only a narrow category of short-term variable cost savings, while more forward-looking, quality-based, or dynamic efficiencies have typically been dismissed. On paper, the Commission has never approved a merger on the basis that efficiencies outweighed an identified significant impediment to effective competition.  This article examines the key challenges of the current framework, assesses the extent to which the Draft Guidelines published on 30 April 2026 address them, and asks whether the new framework is likely to translate into a genuine shift in decisional practice. The Draft Guidelines mark a genuine step forward: they invite earlier engagement with efficiency arguments, formally align the evidentiary standard for the "theory of benefit" with that applicable to the Commission's own ”theory of harm”, and broaden the taxonomy of recognised efficiencies to embrace dynamic efficiencies and, for the first time, resilience and sustainability as freestanding parameters of competition. Yet the promised equality of arms remains incomplete. Because the three efficiency conditions stay cumulative and each must independently meet a demanding standard, whereas harm may be established on the whole body of evidence taken together, the assessment of benefit remains structurally more exacting than the assessment of harm. Two further gaps compound this asymmetry: the Draft Guidelines do not squarely resolve how the choice of counterfactual should operate in the efficiencies context, and they leave entirely unaddressed how remedies interact with efficiencies once a competition concern is found. If the Commission's stated commitment to evidentiary symmetry is to be meaningful, the final Guidelines must close these gaps and give proper weight to the positive implications of scale and resilience, which are increasingly the key considerations on which the competitiveness of European industry depends.

1.  Introduction

Just over a year ago the Commission embarked on a review of its Horizontal Merger Guidelines1 and Non-Horizontal Merger Guidelines,2 a process framed as an absolute priority for EVP Ribera’s mandate. On 30 April 2026, the Commission published the long-awaited draft3 for stakeholder comment, with a deadline of 26 June 2026. The Commission is now assessing the responses received with a view to adopting the final Guidelines in the autumn of 2026.

The review has been shaped by a broader reckoning with Europe’s competitiveness, prompted in particular by the publication of the Letta Report4 and the Draghi Report5. The Letta Report called for greater scale and consolidation in strategic sectors (such as telecoms) to enhance European competitiveness.6 The Draghi Report called on the Commission to strengthen the competitiveness of European companies by enhancing their resilience and capacity to invest, innovate, and improve efficiency.  Draghi suggested that the EU needs companies with “sufficient scale to compete with Chinese and American superstar companies”.7  In her mission letter to EVP Ribera, Commission President von der Leyen directed that the review of the Merger Guidelines “give adequate weight to the European economy’s more acute needs in respect of resilience, efficiency and innovation, the time horizons and investment intensity of competition in certain strategic sectors, and the changed defence and security environment”. The conclusions of both reports have only grown more relevant as the Commission has worked on the Draft Guidelines. Over the past year, it has become clear that the assumptions underpinning the previous framework – a broadly stable multilateral trading order, reliable global supply chains, and the primacy of a price-focused competitive assessment – no longer hold. Other major economies have adjusted their policies to reflect industrial strategy and broader strategic interests, and the pressure on the Commission to do the same has been acute.

That direction and context have driven a public consultation of unusual breadth8 – covering topics from the basic building blocks of merger review to innovation, sustainability, digitisation, and supply chain resilience – and set the political tone for a review that is, at least in its ambitions, the most far-reaching since the EUMR9 entered into force. The scope of the resulting reform proposals is equally vast. Beyond the treatment of efficiencies, the Draft Guidelines account for significant developments in the case law (including the Court of Justice’s landmark ruling in CK Telecoms) and codify the Commission’s evolving thinking on theories of harm. At the same time, the review has not been without tension. There has been resistance to broadening the role of efficiencies in the assessment, grounded in concerns about preserving legal certainty and the robustness of the existing framework. Nevertheless, the Commission appears to have acknowledged that the treatment of efficiencies and potential merger benefits required reform – not least because it has never cleared a merger under the EUMR on the basis of efficiencies alone, and because there was growing recognition that the existing framework was ill-suited to capturing the benefits that mergers can deliver for innovation, investment, and ultimately the competitiveness of European industry. The Draft Guidelines aim to address this, and several other concerns raised during the consultation process.10 Perhaps the most significant architectural change is the formal introduction of a “theory of benefit” – requiring merging parties to articulate and substantiate how specific merger efficiencies maintain or enhance effective competition to the benefit of consumers – coupled with the express recognition that the evidentiary standard applicable to efficiency claims is, in principle, the same as that applied to the Commission’s own competitive assessment. Taken together, these changes should, in principle, lead to a more balanced assessment and give merging parties a genuinely meaningful opportunity to demonstrate the benefits of a transaction.

Whether the Draft Guidelines ultimately allow merging parties to successfully advance a broader range of efficiency claims is the main question this article seeks to address.  The article begins by examining the current framework and its shortcomings (Section 2), before identifying the key challenges that have emerged from two decades of decisional practice (Section 3). It then assesses the extent to which the Draft Guidelines address those challenges and identifies areas where the proposed framework may fall short (Section 4). Section 5 concludes.

2. The current framework

2.1. The legal test

The EUMR provides limited express guidance on the treatment of efficiencies. Recital 29 acknowledges that efficiencies brought about by a concentration may counteract the effects on competition, and in particular the potential harm to consumers, that it might otherwise have, such that the concentration would not significantly impede effective competition. Article 2(1) EUMR further directs the Commission to take into account “the development of technical and economic progress provided that it is to the consumers’ advantage and does not form an obstacle to competition”.

The framework for assessing efficiency claims is set out in Section VII of the Horizontal Merger Guidelines, which addresses the topic in just thirteen paragraphs spanning roughly two pages. For the Commission to take account of efficiency claims in its assessment of a merger, three cumulative conditions must be met: the efficiencies must benefit consumers, be merger-specific, and be verifiable.11  Each of the three criteria is discussed below in turn.

·       Benefits to consumers. The relevant benchmark is that consumers will not be worse off as a result of the merger. Efficiencies should be substantial and timely, and should, in principle, benefit consumers in those relevant markets where it is otherwise likely that competition concerns would occur.12 Cost efficiencies that lead to reductions in variable or marginal costs are regarded as “more likely to be relevant” than reductions in fixed costs, as they are more likely to result in lower prices for consumers.13 In practice, this meant that fixed cost savings were typically not recognised as relevant efficiencies.  In addition to cost savings, the Commission has recognised that consumers may benefit from new or improved products and services resulting from innovation14, as well as from green efficiencies resulting in improved sustainability. Where efficiencies arise outside the affected markets (out-of-market efficiencies), the Commission’s position has been that they can only be accepted if the benefits cover substantially the same customers otherwise harmed by the merger,15 which was another factor that often led to dismissing efficiency claims.

·       Merger-specificity. Efficiencies are relevant to the competitive assessment only when they are a direct consequence of the notified merger and cannot be achieved to a similar extent by less anticompetitive alternatives.16 It is for the merging parties to demonstrate that no less anticompetitive alternative exists, whether of a non-concentrative nature (such as a licensing agreement or a cooperative joint venture) or of a concentrative nature. The alternatives must be reasonably practical in the business situation faced by the merging parties, having regard to established business practices in the industry concerned; they cannot be ruled out simply because they might be more cumbersome or expensive.17 The General Court has further clarified that an alternative may constitute a “reasonably practical” option even where it is not the prevailing type of arrangement in the industry, provided there is evidence that such arrangements have been concluded in practice.18

·       Verifiability. Efficiencies must be verifiable such that the Commission can be reasonably certain that they are likely to materialise and be substantial enough to counteract the merger’s potential harm to consumers.19 Where reasonably possible, efficiencies and the resulting benefit to consumers must also be quantified; quantification alone, however, is not sufficient and quantified claims have been rejected in a number of cases.20 The burden of demonstrating that efficiency claims are likely to be realised rests with the notifying parties, as does the burden of showing to what extent those efficiencies are likely to counteract any adverse effects on competition.21

The Merger Guidelines note further that the greater the possible negative effects on competition, the more the Commission must be satisfied that the claimed efficiencies are substantial, likely to be realised, and passed on, to a sufficient degree, to consumers.22 Neither this principle, nor the three-pronged test itself, nor the requirement that the three conditions be cumulatively satisfied, is set out in the text of the EUMR. They are purely the creature of soft law - namely, the Horizontal Merger Guidelines adopted by the Commission - albeit soft law whose cumulative character has since been confirmed by the EU Courts.23

2.2. From theory to practice

The three-pronged test sets a high bar, and in practice, it has proved exceptionally difficult to satisfy. The Commission typically considers efficiencies separately from the main competitive assessment, after a significant impediment to effective competition (“SIEC”) has been identified. That approach is hard to square with the Horizontal Merger Guidelines’ own language of an “overall” assessment of the concentration.24

Even in the rare cases in which the Commission conducted a detailed analysis of the efficiencies claimed by the parties, that analysis was treated as secondary to the competitive assessment. The T-Mobile Netherland/ Tele2 Netherlands case is an example of this trend: while acknowledging that some of the efficiencies presented by the parties met the three cumulative criteria required by the Horizontal Merger Guidelines, the Commission described the analysis as "not necessary”25, since the Commission had already concluded that the transaction would not significantly impede effective competition. In other words, the assessment of efficiencies arguments brought by the parties is deemed necessary only where a SIEC is found.

One of the consequences of this approach is a near-total absence of meaningful decisional practice on efficiencies. Since the vast majority of merger decisions are adopted in Phase I26, where the Commission clears transactions without finding serious doubts as to their compatibility with the internal market, efficiency claims simply rarely become relevant. Substantive efficiency analysis is therefore confined, at best, to the small minority of cases that proceed to Phase II, leaving practitioners with little guidance beyond the Merger Guidelines.

3. Key Challenges

As noted above, the current framework presents multiple challenges for merging parties seeking to put forward efficiency claims. The consultation revealed a broad consensus among practitioners, economists, and national competition authorities that reform is needed - though views differ as to the extent and direction of change. 

3.1. Framework for assessing efficiencies and the standard of proof

The current framework makes clear that the burden of demonstrating efficiencies rests on the merging parties, but does not set out a clear standard of proof. In practice, that standard must be derived from the Commission’s decisional practice. All three prongs of the efficiencies test must be met, and the Commission's interpretation of each has compounded the difficulty.

A related procedural concern is the timing of the Commission's engagement with efficiency arguments. In practice, efficiency claims have rarely been considered before the Commission has already concluded that the merger is likely to give rise to material competition concerns. The relegation of efficiencies to the end of the process itself suggests a deep institutional scepticism as to whether they could make a difference.

3.2. Merger specificity

As alluded to above, the merger-specificity test has been a source of particular difficulty in practice, not least because of the evidentiary burden it places on the notifying parties. The test requires the parties to demonstrate that the claimed efficiencies cannot be achieved to a similar extent through less anticompetitive alternatives, such as, e.g., network sharing agreements, licensing, or cooperative joint ventures.27

A recurring concern in the consultation is that this assessment is sometimes conducted by reference to hypothetical alternatives that would never realistically materialise, rather than alternatives that are genuinely available in the parties' business situation. Concrete cost savings on which an investment decision has already been taken have been dismissed on the basis of a vague counterfactual in which the parties might engage in some alternative form of cooperation that they had never in fact considered. In the context of four-to-three mobile mergers, for example, the Commission has repeatedly dismissed substantial network consolidation efficiencies on the ground that comparable cost savings could, in principle, be achieved through network sharing agreements28. The resulting asymmetry is inherent: it is always more difficult to demonstrate that something will not conceivably happen than to posit that it might.

3.3. Timeliness

Another frequently cited concern is the Commission’s approach to the temporal horizon for assessing efficiencies. The existing Merger Guidelines were designed principally around price effects and therefore focused on short-term cost efficiencies.  In its decisional practice, the Commission has accepted efficiencies expected to materialise within a specific period following closing (typically in the range of three to four years), while rejecting those unlikely to arise within that window.29 This meant that larger investments or innovation-related efficiencies, in the rare cases where they played a role, were either largely rejected or found insufficient to offset the identified harm because they were too uncertain or would occur too far in the future.30

This tension is compounded in the case of scale efficiencies, where the realisation of benefits is contingent on post-merger integration that itself requires sustained investment over a multi-year horizon. So far, the Commission’s assessment of the benefits of scale has been focused on cost-saving: in FedEx/TNT, the Commission has recognised that significant economies of scale can be passed on to consumers in the form of price reductions where the relevant cost savings relate to variable, rather than fixed costs.31

3.4. Metrics and non-price efficiencies

As mentioned above, the current framework is predominantly oriented towards cost efficiencies and their pass-through to consumers in the form of lower prices. That is due mostly to the fact that the assessment of non-price efficiencies - including quality, sustainability, and resilience - raises difficult questions of measurement for which the existing Merger Guidelines provide limited guidance.

Unlike variable cost reductions, these benefits do not lend themselves to straightforward quantification; they are often uncertain in their timing, diffuse in their distribution, and difficult to attribute specifically to the merger rather than to broader market dynamics.

4. A step forward: the Draft Guidelines’ new approach to the assessment of efficiencies

The review of the Merger Guidelines is an opportunity to revisit this approach. The legal basis for doing so is already there. Article 2(1)(b) EUMR expressly directs the Commission to appraise concentrations by reference to, among other things, “the development of technical and economic progress", which provides a solid legal basis for a more holistic assessment of efficiencies in the merger analysis.  At the same time, the EUMR is not prescriptive as to how efficiencies should be assessed or what criteria they need to satisfy.  As such, the Commission retains a wide margin of discretion in developing its framework and addressing the shortcomings identified above.

The Draft Guidelines aim to do so and signal a markedly greater willingness on the Commission's part to engage with parties' efficiency arguments presented by the parties, but some important caveats remain. They introduce a clearer and more elaborate framework for assessing efficiencies and devote considerably more space to setting out the types of efficiencies the Commission will treat as relevant. 

4.1. Building on the established framework. Evolution and continuity

In terms of process and the key assessment criteria, the Draft Guidelines largely preserve the established framework: the burden of proof remains on the merging parties, efficiencies continue to be assessed separately from the competitive harm the Commission must establish, and the three-pronged test of consumer benefit, merger-specificity and verifiability still governs the assessment of efficiency claims. Three meaningful changes are nonetheless introduced. First, parties are now explicitly invited to raise efficiency arguments early, including at pre-notification stage, and the Draft Guidelines make clear that a preliminary finding of harm is not required before efficiency claims can be submitted. Second, the evidentiary standard required of parties is explicitly aligned with that applied by the Commission to its own theories of harm. Third, a broader range of efficiencies is recognised, spanning direct cost efficiencies, a new category of dynamic efficiencies (investment and innovation), and resilience and sustainability.

The Commission stopped short of formally integrating efficiencies into the overall assessment of the deal, and the burden of proof remains firmly on the parties.  However, it is significant that the Draft Guidelines now make clear that a finding of substantive competition concerns is not a precondition for efficiency claims to be submitted or considered, and that early engagement by merging parties on efficiencies is welcomed.32 This is because it enables the Commission to factor the "theory of benefit" into the overall analytical process from the outset. In practice, this earlier integration should, in principle, support a more complete and accurate assessment of the merger's overall competitive effects. Notably, the Commission has not waited for the finalisation of the Guidelines to put this approach into practice, testing it in the review of the recently cleared joint venture between Airbus SAS and Société Air France.33

Perhaps most significantly, the Draft Guidelines formally align the standard of proof for efficiency claims with that applicable to the Commission's own competitive assessment: both the theory of benefit and the theory of harm must now satisfy the "more likely than not" threshold established by the Court of Justice in CK Telecoms. The Court further clarified that this must be established “by means of a sufficiently cogent and consistent body of evidence”, which is also the test that the Draft Guidelines apply to the “theory of benefit.” 34   There is thus a formal symmetry between (i) the evidentiary burden on merging parties when substantiating their efficiency claims and (ii) that which the Commission itself must discharge when establishing the factual basis for its theories of harm, as paragraph 26 of the Draft Guidelines makes clear. Paragraph 32 further reinforces this by confirming that the standard operates uniformly, regardless of the complexity of the case, the procedural stage reached, or the ultimate outcome of the investigation.

This symmetry applies to an expanded analytical framework, which now includes a dichotomy between direct and dynamic efficiencies (the same distinction is drawn on the harm side between direct and dynamic effects).35 Direct efficiencies result from the integration or combination of the merging firms’ assets and businesses, typically deriving from cost savings or quality improvements, and are expected to translate into lower prices, new or improved products, higher product quality or variety, and improvements in other non-price parameters of competition. Dynamic efficiencies, by contrast, confer the ability or increase the incentives of the merged entity to invest or innovate. The Commission notably acknowledges that disruptive innovation can deliver significant benefits to consumers but typically requires large, sustained investments with uncertain returns, challenges that may deter or hinder investment absent the merger.36  Nonetheless, there is some tension between that acknowledgment of the relevance of long term dynamic efficiencies and certain statements that appear to suggest that dynamic efficiencies may be more difficult to quantify and establish.37

As noted above, the three conditions are preserved in full and apply equally to both categories of efficiencies and must be met cumulatively,38 and the standard of proof merging parties need to meet remains quite high. Firstly, on verifiability, parties must demonstrate by a sufficiently cogent and consistent body of evidence that the claimed efficiencies are likely to materialise, are timely and are substantial enough to counteract the merger's predicted anticompetitive effects39. Secondly, on merger-specificity, parties must establish that the claimed efficiencies would not arise to a similar extent on a standalone basis or through less anticompetitive arrangements, a condition whose application is naturally sensitive to the availability of cooperation or sharing mechanisms in the relevant sector.40  Thirdly, on consumer benefit, efficiencies must be passed on and they must accrue to substantially the same consumers as those affected by the merger,41 a requirement that will call for careful framing in cases where the benefits are systemic or accrue across a broad class of beneficiaries, such as sustainability or resilience claims (see 4.3 below). The Draft Guidelines do, however, provide some scope for out-of-market benefits, following calls for their broader recognition. Where two markets are related, benefits accruing to consumers in a separate market may be taken into account, provided that the group of consumers negatively affected by the merger and the group benefiting from the efficiencies substantially overlap.42 That concession remains limited in that harm in one market cannot be balanced against benefits in an entirely unrelated market, and out-of-market benefits are only relevant to the extent that they fully compensate substantially all consumers harmed by the merger.43

Overall, the framework is clearer and more evenly balanced than the existing Merger Guidelines have provided. However, it is hard to say the stated objective of ensuring a “level‑playing” field is achieved between the treatment of harm and the treatment of benefit, and that is for one very specific reason. This is because all three conditions efficiency conditions (verifiability, merger specificity and consumer benefit) are expressly cumulative and each condition must be established to the requisite high standard.44   If one condition is  not established, even slightly, the efficiency does not count at all in the balancing exercise.

This is not the case for harm, as confirmed in CK Telecoms, where the Court of Justice overruled the General Court precisely on this point. By way of example, in the context of a merger in an oligopolistic market, two factors are of particular importance to the assessment – whether the parties are close competitors and whether one of the parties is an important competitive force. In CK Telecoms, the Court confirmed that positive evidence of harm could be inferred from a lesser degree of closeness between the parties, while distance between them may be “evidence to the contrary”; the parties did not have to be each other’s closest competitors, or compete “particularly closely,” for a degree of closeness to strengthen the case for a SIEC, a position the Draft Guidelines draw directly from CK Telecoms.45 Relative closeness may be considered as evidence of a likely SIEC. Similarly, the notion of important competitive force is not an independent, freestanding threshold that must be established separately before it can support a finding of harm.  A firm may qualify as an important competitive even if it does not stand out or is a maverick and there can be more than one “important competitive forces” on the market.46  Last but not least, CK Telecoms makes clear that harm must be established based on the whole body of evidence: there is no need to establish specific individual components of harm to a particular standard in isolation. 47It suffices that, overall, based on a cogent and consistent body of evidence, harm is “more likely than not”.  By contrast, each condition to show efficiencies must be individually established to the applicable standard, and if one of the conditions fails, the “benefit” is not considered in the assessment at all48. That asymmetry, a holistic, cumulative-evidence approach to harm against a conjunctive, all-or-nothing approach to efficiencies, does not create a level playing field for the parties.

The Commission is also not required to quantify the consumer welfare impact of its theories of harm in every case, whereas merging parties are expected to do so for their efficiency claims where reasonably possible. The Draft Guidelines introduce a meaningful corrective in that respect: where efficiencies cannot be precisely quantified, parties may instead detail the nature and magnitude of the claimed benefit. For direct efficiencies, this may happen particularly where the benefit does not reduce to a straightforward cost saving; for dynamic efficiencies, where the absence of established demand for a new product or technology may render exact figures structurally unattainable.49 In other words, there is a certain degree of flexibility, which may allow the parties to rely on indicative figures or reasoned ranges.  This flexibility is nonetheless limited: where the claimed benefit and the predicted harm are of comparable magnitude, precise quantification remains necessary.50 Therefore, the practical value of the corrective will depend considerably on the weight the Commission is prepared to accord rigorous qualitative evidence, a concern that arises with particular force for dynamic efficiencies, where the causal chains and investment horizons are longer, and the range of outcomes more uncertain than for near-term cost savings (which the Draft Guidelines explicitly say may be a problem).51

4.2. Broadening the scope of recognised efficiencies. Investment, innovation, scale

The Draft Guidelines broaden the range of efficiencies that may in principle be recognised and set out a dedicated taxonomy of potential efficiencies, organised around the synergy mechanisms that generate them, echoing the Commission’s parallel move toward more structured, codified theories of harm on the other side of the assessment. The Draft Guidelines also notably recognise that the assessment of mergers should give adequate weight to “scale, innovation, investment and resilience as procompetitive factors that can benefit from a degree of consolidation”.52 They further acknowledge that economies of scale, scope or density may generate not only direct cost savings but also dynamic efficiencies, by decreasing the incremental cost of investment and innovation and thereby increasing the incentive to invest or innovate. As with any other efficiency claim, however, the merging parties must show that such scale efficiencies could not be achieved through organic growth and must satisfy the three cumulative criteria discussed above – a standard that, as noted, remains a demanding one to meet, which is further explained below.

The introduction of the dichotomy between direct and dynamic efficiencies (see 4.1 above), the latter arising from increased incentives to invest or innovate, is particularly significant and signals the adoption by the Commission of a more forward-looking approach. In the Draft Guidelines, the two categories attract different timeliness rules. Direct efficiencies are timely if the synergies and the resulting consumer benefits in principle occur without delay. However, the time horizon may be longer if that is consistent with the characteristics and dynamics of the market and the theory of harm, thereby linking the acceptable timeline for efficiencies directly to the timeline of the harm itself.53

Under the current framework, the Commission’s decisional practice has focused primarily on short-term variable cost savings and their pass-through to consumers, a pattern particularly evident in the telecoms sector. In Orange/Jazztel, the Commission accepted that mobile cost savings of a variable nature could benefit consumers.54 In Orange/MásMóvil, it similarly accepted cost savings related to wholesale access services on the basis that variable cost savings are more likely to be passed on, whilst rejecting network roll-out efficiencies on multiple grounds, including their timing, verifiability, and merger-specificity.55 Telecoms precedents also show the significant practical difficulties merging parties face when putting forward scale, investment and innovation-related efficiencies. In Hutchison 3G UK/Telefónica UK, the Commission drew a sharp analytical distinction between scale rendering incremental investments more profitable and fixed cost savings generating cash flow to fund investment, which it held do not affect the profitability of incremental investments and which it rejected for want of specific evidence that increased cash flows would translate into greater investment in the particular case; this was compounded by the fact that the notifying party did not contend that Three was cash-flow constrained, given the financial resources available to its parent group.56 In Hutchison 3G Italy/WIND, the parties’ own business plans revealed that improved cash flows would not be channelled into incremental network investment (total CAPEX was projected to fall) and the network improvement efficiency failed on merger-specificity in any event, LTE active sharing constituting a practicable less anticompetitive alternative.57

A longer time frame for benefits to materialise may, however, make efficiencies less predictable and less likely to be quantifiable. Notably, the Commission acknowledges that a time horizon of three to four years has been accepted in past cases (in some sectors such as the telecoms industry) and that the time horizon of efficiencies should be assessed in the light of the sector’s specific characteristics.58 For dynamic efficiencies, the investment or innovation must materialise, in principle, shortly after closing, but the benefits to consumers may emerge over a longer time horizon as long as it is possible to verify that they will be substantial enough to counteract the merger’s anticompetitive effects.59

This framework should have direct implications for how investment cycles are treated in the competitive assessment. The telecommunications sector is a good candidate, being one of the most capital-intensive industries in the economy: operators must sustain large-scale expenditure on network infrastructure, spectrum, and successive generations of technology over timescales that are structurally longer than those reflected in the existing case practice. The relevant question is accordingly not whether a given timeline conforms to precedent drawn from a particular sector, but whether it is consistent with the investment cycle and competitive dynamics of the industry under review.

The treatment of scale efficiencies reflects similar ambitions. The Draft Guidelines take a step forward, and explicitly recognise that scale and innovation are critical for competing in innovation-heavy sectors, calling for efficiencies to be assessed through a forward-looking approach giving adequate weight to innovation, investment and resilience of the internal market.60 Scale-driven benefits may also extend to access to finance: a larger, financially sounder entity may be better placed to raise the capital necessary to sustain the investments required to compete effectively.61

Central to this shift is an explicit endorsement of the idea that European firms may need to scale up to compete against large global incumbents. The Draft Guidelines expressly welcome mergers that increase the competitiveness of European industry in global markets. However, this should not be confused with an unconditional endorsement of the creation of so-called “European champions”. The relevant distinction is not simply a matter of size or market shares, but between consolidation that genuinely enhances competitiveness and consolidation that merely entrenches market power - and the Draft Guidelines are clear that only the former falls within the scope of what the new framework is designed to facilitate. In that context, the Draft Guidelines note that cross-border mergers that bring together complementary activities from different Member States, without giving rise to significant overlaps, are singled out as paradigmatic examples of value-enhancing consolidation.62 The Commission has repeated this point consistently, but it arguably has more to do with narrowing the scope of scale-based efficiency claims than with providing an objective basis for assessing scale efficiencies as such: cross-border mergers and mergers combining complementary businesses are, almost by definition, less likely to raise competition concerns in the first place. While it is a welcome additional factor to weigh in favour of clearance, it is unlikely to move the needle if the stated purpose is to recognise scale and investment as relevant to the competitiveness of European industry.

4.3. The missing parts of the puzzle: counterfactual and the remedies

Two further gaps in the Draft Guidelines are worth highlighting. Both bear on the pivot towards a more holistic assessment of benefits and harms, and towards a genuine level playing field between the treatment of harm and the treatment of benefit.

The first point, not entirely resolved by the Draft Guidelines, sits at the intersection of the theory of harm and the theory of benefit: the choice of counterfactual. In most cases, the Commission assumes that the counterfactual is the status quo – that absent the merger, the parties would continue to compete and invest and market conditions would otherwise remain broadly unchanged (a notable exception being T-Mobile Netherlands/Tele2 Netherlands63). In the current economic climate, that assumption should not necessarily be the default. Many European industries are struggling with competitiveness and are subject to structural underinvestment and firm exit. In those circumstances, a merger may deliver cost savings and improve the scale and resilience of the industry in a way that leaves consumers better off than under a but-for scenario in which one of the merging firms exits the market, potentially in a disruptive fashion. The Draft Guidelines confirm that establishing the relevant counterfactual is, as a general matter, for the Commission to prove, save for the failing firm defence and the merger-specificity limb of the efficiencies test, which remain for the merging parties to establish.64 The counterfactual matters for both harm and benefit, and in practice the parties will invariably contest it.  Where the Draft Guidelines could usefully say more is in setting out how counterfactual analysis should operate specifically in the context of efficiencies, making clear that where the parties assert a counterfactual other than the status quo, it remains for the Commission – not the parties – to justify why the status quo should nonetheless be treated as the relevant benchmark, and that such an analysis should form part of the overall assessment of both efficiencies and harms resulting from the transaction.

The second gap concerns remedies. Structural remedies in particular may materially reduce the synergies that a merger would otherwise generate, yet the interaction between remedy design and the parties' efficiency claims has never featured in the Commission's assessment. What matters at that stage is solely whether the proposed remedies eliminate the identified competition concern; consistent with its decisional practice, the Commission treats commitments as adequate only where it can conclude, with the requisite degree of certainty, that the resulting commercial structure will be sufficiently workable and lasting to remove the significant impediment to effective competition in its entirety. The consequence is that even where the parties have established some efficiencies, whether because the standard was not fully met or because the efficiencies were insufficient to outweigh the harm, those efficiencies drop out of the analysis entirely once the discussion moves to remedies. That outcome is difficult to justify. The standard objection is that behavioural remedies are harder to monitor than structural ones, but complex carve-outs raise comparable practical difficulties, and in either case the burden of monitoring compliance typically falls not on the Commission but on a monitoring trustee engaged and paid for by the parties. Recognising the interaction between remedies and efficiencies could improve outcomes in merger review: where a merger generates genuine efficiencies, there is no obvious reason to discard them wholesale at the remedy stage rather than calibrating the remedy to preserve, so far as possible, the benefits that consumers would otherwise obtain from the merger.

5. Conclusions

The Draft Guidelines introduce a more structured and elaborate framework for the assessment of efficiencies than the one they propose to replace. Without fundamentally altering the underlying framework or the allocation of the burden of proof, they nonetheless introduce meaningful changes: earlier engagement with efficiency arguments, a formal evidentiary alignment between the theory of benefit and the theory of harm, and a broadened taxonomy of recognised efficiencies.  The extent to which the new framework, if confirmed in the final version of the Merger Guidelines, will translate into a genuine shift in how the Commission engages with efficiency claims in practice remains to be seen. That shift will depend not only on the Commission's willingness to give real weight to the benefits of scale, resilience and investment, but also on its readiness to close the gaps - on counterfactual and on remedies - that the current draft leaves open.

Several points are conceptually significant. The forward-looking methodology for dynamic efficiencies marks a genuine departure from the price-centric orientation of the existing Merger Guidelines. So does the express recognition that scale, investment, innovation and resilience are procompetitive benefits that may result from consolidation.  So is the formal introduction of a “theory of benefit” and inviting merging parties to articulate and substantiate, in due time, how specific merger efficiencies arise and maintain or enhance effective competition to the benefit of consumers.65 Long anticipated, its introduction is welcome; it provides merging parties with a clearer evidentiary roadmap, though it also raises the bar for those seeking to rely on efficiency claims.

However, translating these changes into operational practice raises several questions. The three-pronged legal test survives, and the evidentiary standard, despite the claim of symmetry with the theory of harm, remains demanding, not least because the three conditions remain cumulative and each must be established to the requisite standard, whereas harm may be established on the whole body of evidence taken together, as CK Telecoms confirms. The treatment of scale is similarly double-edged: the emphasis placed on cross-border, complementary mergers as paradigmatic examples of value-enhancing consolidation is a welcome additional route to clearance, but it does little to advance the assessment of scale efficiencies in mergers that are not already unlikely to raise competition concerns. Two further gaps compound these questions. First, the Draft Guidelines do not squarely address how the choice of counterfactual should operate specifically in the efficiencies context, leaving unresolved who bears the burden of displacing the status quo as the default benchmark when the parties invoke a different one. Second, the interaction between remedies and efficiencies remains entirely unaddressed: once a remedy is required, any efficiencies the parties have established drop out of the analysis, with no mechanism for calibrating the remedy to preserve the benefits consumers would otherwise have obtained.

These gaps point to a common underlying cause: the existing three-pronged test was designed to screen short-term variable cost savings, in line with the price-centric focus of the existing Merger Guidelines. Theories of harm, by contrast, have since evolved to capture the more dynamic effects that a merger may have on the market, while the efficiencies test has remained essentially static. The task ahead, in other words, is to apply the same evolution in thinking to the theory of benefit that has already been applied to the theory of harm, a process the Draft Guidelines have begun, through the alignment of the standard of proof and the introduction of dynamic efficiencies, but have not yet completed.

That incompleteness is most visible in the structure of the test itself. A test built around three cumulative conditions is a reasonable tool for screening short-term variable cost savings, but it is not well suited to assessing longer-term, more dynamic benefits, where the evidence is inherently more qualitative and the causal chains longer. A more holistic approach66 to the efficiencies defence, in which the Commission weighs the evidence relating to consumer benefit, merger-specificity and verifiability overall rather than requiring each to be established cumulatively to a demanding standard – mirroring the “more likely than not” standard the Court of Justice applied to theories of harm in CK Telecoms – would go further towards realising the symmetry the Draft Guidelines already claim. The same recalibration should extend to the choice of counterfactual: there should be no default assumption that the counterfactual is the status quo, and that principle should apply as much to the assessment of efficiencies as it does to the assessment of harm. Finally, the Commission should account for the impact on established efficiencies when designing remedies, since structural remedies in particular tend to eliminate the very efficiencies the parties have gone to the trouble of establishing.

A rather obvious objection could be raised against the proposals set out above: that a more elaborate, forward-looking and symmetrical efficiencies framework risks greater complexity, added uncertainty for merging parties, and a heavier burden of information requests as the Commission tests dynamic, resilience and sustainability claims that are inherently hard to evidence. That concern should not be overstated. The Commission’s theories of harm have already moved in this direction: the Draft Guidelines codify increasingly sophisticated, forward-looking theories of harm addressing innovation, investment and resilience effects, supported by correspondingly extensive information requests and evidence. The relevant comparator is thus not a simpler status quo, but the level of complexity the Commission already accepts, and imposes on merging parties, to assess the potential harms. Aligning the efficiencies framework with that same standard of rigour recognises a complexity that already exists rather than introducing a new one. If anything, a more consistent and internally coherent framework for assessing efficiency claims, mirroring the structure and evidentiary expectations already applied to theories of harm, should improve legal certainty rather than undermine it, by giving merging parties a clearer and more predictable basis on which to plan their evidence and engage with the Commission from the outset.

• 1      Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings, OJ C 31, 5.2.2004, pp. 5–18 (“Horizontal Merger Guidelines”).
• 2      Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of concentrations between undertakings, OJ C 265, 18.10.2008, pp. 6–25 (“Non-Horizontal Merger Guidelines”). Together with the Horizontal Guidelines, “Merger Guidelines”.
• 3      Draft Communication from the Commission, Guidelines on the assessment of mergers under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings (“Draft Guidelines”), available at https://competition-policy.ec.europa.eu/document/download/46dde10f-85c1-4590-a3f4-2b71f85685ef_en?filename=Merger%20Guidelines%20-%20final%20for%20public%20consultation.pdf.
• 4      E. Letta, Much More than a Market, April 2024 (“Letta Report”).  The Letta Report was commissioned by the European Council and presented by former Italian Prime Minister Enrico Letta in April 2024.
• 5      M. Draghi, The Future of European Competitiveness, September 2024 (“Draghi Report”). The Draghi Report was prepared by former European Central Bank President Mario Draghi at the request of the European Commission.
• 6      Letta Report, pp. 45-72.
• 7      Draghi Report, p. 298.
• 8      As an input to the review, the Commission published on 24 August 2026 its commissioned Economic Study on the Dynamic Effects of Mergers (“Oxera Study”) - prepared by Oxera, in collaboration with Professor Otto Toivanen as Leading Academic Researcher and Professors Yassine Lefouili and Leonardo Madio as Economic Advisors). The Oxera Study draws on a review of more than 450 publications and evidence from past merger cases to propose an analytical foundation for the economic assessment of dynamic merger effects.
• 9      Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings, OJ L 24, 29.1.2004, pp. 1–22 (“EUMR”).
• 10    The Draft Guidelines acknowledge, for example, that “efficiencies can be an important driver of the parties’ decision to pursue the transaction. Greater clarity regarding the role of efficiencies in the merger control assessment is important to avoid chilling effects on transactions that would be beneficial for customers and the internal market. Demonstrated efficiencies will play a key role in the assessment of mergers going forward”, para. 291.
• 11     Horizontal Merger Guidelines, para. 78.
• 12     Ibid, para. 79.
• 13     Ibid, para. 80; FedEx/TNT (Case M.7630), paras 556–581. In the telecoms sector in particular, the Commission has treated wholesale costs as variable costs and accepted that they are more likely to be passed on to consumers. See, e.g., Orange/Jazztel (Case M.7421), para. 746; Orange/MásMóvil/JV (Case M.10896), para. 1679.
• 14     Horizontal Merger Guidelines, para. 81.
• 15     European Commission, Focus Paper, Topic F: Efficiencies, May 2025; Booking/eTraveli (Case M.10615), paras 1152,1171, in which efficiencies benefitting a different set of consumers were rejected.
• 16     Horizontal Merger Guidelines, para. 85.
• 17     Hutchison 3G Austria/Orange Austria (Case M.6497), para. 417; Telefónica Deutschland/E-Plus (Case M.7018), para. 1137, where it was noted that “for an alternative solution to be considered reasonably practical, it is sufficient that it brings positive added value to the Parties, taking into account the business case faced by each of them”.
• 18     Deutsche Börse AG v Commission (Case T-175/12), ECLI:EU:T:2015:148, paras 284–285.
• 19     Horizontal Merger Guidelines, para. 86.
• 20     See, e.g., Ryanair/Aer Lingus (Case M.4439), para. 1151; Western Digital/Viviti (Case M.6203), para. 1037.
• 21     Horizontal Merger Guidelines, paras 87-88.
• 22     Ibid, para. 84.
• 23     See Case T-834/17, United Parcel Service v Commission, EU:T:2022:84, para. 135; Case T-175/12, Deutsche Börse v Commission, EU:T:2015:148, para. 238.
• 24     Horizontal Merger Guidelines, paras 76-77.
• 25     T-Mobile NL/Tele2 NL (Case M.8792), para. 887.
• 26     In 2025, the Commission adopted 368 decisions under Article 6(1)(b) EUMR. Only 4 decisions were adopted under Article 6(1)(c). See European Commission, Statistics on Merger Cases, available at https://competition-policy.ec.europa.eu/mergers/statistics_en.
• 27     Horizontal Merger Guidelines, para. 85.
• 28     See, e.g., Hutchison 3G Italy/WIND/JV(Case M.7758), paras 1617- 1630.
• 29     Orange/MásMóvil/JV (Case M.10896), para. 1597.
• 30     See, e.g., Siemens/Alstom (Case M.8677), para. 1263, where R&D cost savings arising from the elimination of duplicate R&D projects were rejected on the basis that it was uncertain whether they would result in any benefits to consumers, as the elimination of overlapping R&D projects could also reflect a loss of innovation competition and therefore harm consumers; Deutsche Börse/NYSE Euronext (Case M.6166), where the Commission found that the efficiency claims, including projected innovation and technology benefits, were insufficient to outweigh the identified harm to competition and that the merger would reduce the incentive for introducing further innovations in technology, process and market  design; Hutchison 3G UK/Telefónica UK (Case M.7612), para. 2608, where the Commission concluded that the claimed network and scale efficiencies did not meet the three cumulative criteria and that the fact they would not materialise before a later date reduced the weight it could place on them even if they had otherwise met those criteria; Orange/MásMóvil/JV (Case M.10896), para. 1739, where the Commission found that even if the claimed incremental FTTH and 5G roll-out benefits were to occur, any improvements in quality or competition would materialise only in the medium term and would benefit only a small subset of retail customers, whereas the substantial likely price effects would be felt across the entire Spanish market immediately (in the initial four years).
• 31     FedEx/TNT (Case M.7630), paras 556–567.
• 32     Draft Guidelines, para. 36.
• 33     Airbus/Air France/JV (Case M.11295), decision not yet published. See Commission Competition Merger Brief, Issue 5/2026, where the Commission described the case as the “first example of the renewed role of efficiencies in the overall assessment of a transaction. The Parties engaged early on, on a no-prejudice basis: pool synergies and geographic footprint synergies were found prima facie plausible as merger specific and consumer beneficial, even if their verifiability ultimately could not be established during the Phase I investigation” available at https://competition-policy.ec.europa.eu/document/download/be136ec9-2ec7-443e-8175-301f4d12ace0_en?filename=kd0126013enn_merger_brief_2026-5.pdf.
• 34     Ibid, paras 26 and 32; CK Telecoms, EU:C:2023:494, para. 87.
• 35     Draft Guidelines, para 114.
• 36     Draft Guidelines, paras 294-296.
• 37     For example, para. 328 of the Draft Guidelines (which discusses the timeliness of efficiencies notes "in the same way as for a theory of harm, a longer time frame for benefits to materialise may make them less predictable and quantifiable."  See also para. 334 on benefit to consumers (“where the outcome of investment or innovation is uncertain, the expected benefit to consumers depends both on the likelihood of success and the benefit conditional on success. Therefore, the merged entity should demonstrate the likelihood that the investment or innovation is successful.”).
• 38     Draft Guidelines, para. 294.
• 39     Ibid, para. 304.
• 40     Ibid, para. 310.
• 41     Ibid, paras 315, 334.
• 42     Ibid, para. 355.
• 43     Ibid, paras 354, 357.
• 44     Ibid, paras 294, 304.
• 45     CK Telecoms, para. 188-192; Draft Guidelines, para. 131.
• 46     CK Telecoms, para. 140-141.
• 47     Ibid, paras 145-147.
• 48     It is notable that this is not how the Commission's own commissioned economic advisers approach the issue when addressing dynamic efficiencies. The Oxera Study recommends a “sliding scale” approach to balancing pro-competitive and anti-competitive dynamic effects, under which “evidence of stronger and more likely beneficial effects [is] required in those cases where harm can be expected to be more significant… or immediate”, rather than a strict, cumulative, all-or-nothing application of the three criteria.
• 49     Draft Guidelines, paras 308 and 329.
• 50     Ibid, para. 316, fn. 395.
• 51     Ibid, para 328.
• 52     Ibid, para.  10.
• 53     Ibid, para 306.
• 54     Orange / Jazztel (case M.7421), para 746: “the Commission pointed out that if the variable mobile cost savings of Jazztel were to be quantified, the Commission could balance consumer benefit from the claimed cost savings against competitive harm within the quantitative analysis conducted. The information provided by the Notifying Party shows that the mobile cost savings which Jazztel would benefit from as a result of the merger are of a variable cost nature, and as such could benefit consumers”.
• 55     Orange/MásMóvil/JV (case M.10896), para 1679: “With regard to FTTH wholesale access services, the Commission considers that the claimed cost savings related to EDM benefit consumers. (a) First, as explained in the Horizontal Merger Guidelines, variable cost savings are more likely to be passed on to consumers. Accordingly, the Commission has accepted cost savings related to EDM in previous telecom cases where these cost savings were found to be verifiable and merger specific and expected passed on to consumers in a timely manner. (b) Second, the Commission considers that the costs related to FTTH wholesale access services vary directly with the number of subscribers”).
• 56     Hutchison 3G UK/Telefónica UK (Case M.7612), paras 2569–2576.
• 57     Hutchison 3G Italy/WIND/JV (Case M.7758), paras 1436–1439, 1508, 1584.
• 58     Draft Guidelines para. 306, fn. 380.
• 59     Ibid, para. 328.
• 60     Ibid, para. 293.
• 61     Ibid, para. 325(g).
• 62     Ibid, paras 11-13.
• 63     T-Mobile NL/Tele2 NL (Case M.8792), paras 361-362, 486-487, 489 and 565.
• 64     Draft Guidelines, paras 37 and 51.
• 65     Draft Guidelines, para. 25.
• 66     Our proposal for a more holistic approach appears aligned with the direction proposed by the Commission’s own commissioned economic study (the Oxera Study), which concludes that the three-limb test “provides a suitable substantive framework” for assessing dynamic efficiencies, but only if applied through a “sliding scale” that weighs the evidence on verifiability, merger-specificity and consumer benefit together against the likely magnitude of harm, rather than through a cumulative, condition-by-condition hurdle.