The European Union is poised to implement its most significant relaxation of corporate merger rules in decades, marking a strategic shift in its approach to competition policy. This change, as reported by the Financial Times, aims to foster the creation of European corporate champions capable of competing with global giants from the US and China. The move reflects a growing recognition in Brussels that scale is not the enemy, but a prerequisite for global relevance and innovation.
The plan is one of the outcomes of the Draghi plan, presented in 2024. The EU is concerned with their lack of competitiveness, even so the EU is larger and economically stronger than eg. the US or Russia. The plan goes along with the plans of other countries like Canada to strengthen the economies against aggressive competitors.
For decades, EU policymakers treated scale with suspicion. The priority was internal competition: dozens of national players battling it out across the bloc, rather than a handful of continental heavyweights. The theory was that hyper-competition would spur innovation. Instead, Europe largely sat out the creation of the defining companies of the modern global economy. With a few exceptions – Spotify among them – the dominant platforms in everything from technology to electric vehicles have emerged elsewhere.
“The change, scooped by the FT’s Barbara Moens, would make it easier for companies to bulk up at home in order to compete with US and Chinese giants, from Amazon to Alibaba.”
— Luxtimes, 2026
The Role of the EU in Controlling Monopolies and Merger Approval
The European Union’s competition policy is designed to prevent the creation of monopolies and ensure fair competition within the Single Market. The EU Merger Regulation (EUMR) empowers the European Commission to review and approve or block mergers that could significantly impede effective competition. The Commission assesses mergers based on their potential to create or strengthen a dominant market position, reduce consumer choice, or stifle innovation.
“The objective of merger control is to examine whether proposed mergers will have harmful effects on competition. If it is considered that a merger will not harm competition, it is approved unconditionally.”
— European Commission, Mergers Overview
Major Mergers Blocked or Limited by the EU
The EU has a history of scrutinizing and, in some cases, blocking mergers to protect competition:
- Siemens/Alstom (2019): The proposed merger between Siemens and Alstom was blocked due to concerns that it would reduce competition in the rail sector, particularly in high-speed trains and signaling systems.
- Illumina/Grail (2023): The EU blocked Illumina’s acquisition of Grail, citing concerns over stifled innovation and limited consumer choice in cancer screening technologies.
- Booking/eTraveli (2023): The European Commission blocked this merger on the grounds that it would strengthen Booking’s dominant position in the online travel agency market, using an “ecosystem” theory of harm for the first time.
These cases illustrate the EU’s commitment to maintaining competitive markets, even when it means blocking mergers that could create larger, more globally competitive firms.
The EU’s Role in Controlling Foreign Direct Investment
The EU has also established mechanisms to screen foreign direct investments (FDI) for potential risks to security or public order. The EU FDI Screening Regulation, which became fully applicable in 2020, enables Member States and the Commission to cooperate in assessing and mitigating risks associated with foreign investments, particularly in strategic sectors such as technology, energy, and infrastructure.
“The objective of the EU’s Foreign Direct Investment (FDI) Regulation is to make sure that the EU is better equipped to identify, assess and mitigate potential risks to security or public order, while remaining among the world’s most open investment areas.”
— European Commission, Investment Screening
Recommendations for Companies
in a New Merger Landscape
If the EU proceeds with the relaxation of merger rules, companies should prepare for:
1. Strategic Consolidation Opportunities
- Companies in fragmented sectors, such as telecoms, banking, energy, and technology, may find it easier to consolidate. This could lead to the creation of larger, more competitive European players capable of challenging global leaders.
- Companies should compare their position versus international competitors, especially Chinese and American. They should develop a strategic in case they see opportunities – but also threats as their competitors might have plans by themselves. They should develop a SWOT Strength Weakness Opportunities Threats-Analysis under the new parameters.
- Companies might review their global perspective to a more regional/European perspective as the planned change might affect their possibilities for global M&A
2. Expected EU position
- The EU is likely to prioritize mergers that enhance innovation, resilience, and sustainability. Companies should align their merger strategies with these goals to gain regulatory approval.
- While intra-EU mergers may face relaxed scrutiny, foreign takeovers—especially by non-EU entities—will continue to be closely examined. Companies should be prepared for rigorous FDI screening processes.
The EU’s planned overhaul of merger rules presents both opportunities and challenges for European businesses. While the relaxation of rules could facilitate the creation of larger, more competitive firms, companies must remain vigilant about compliance, innovation, and strategic alignment with EU priorities.
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