In economically challenging times, an increasing number of companies across sectors and industries appear to view greater consolidation as a response to mounting pressures. At the same time, calls for the creation of “European Champions” are growing louder once again. In this post, I explore to what extent European competition policy has already responded – or is likely to respond – to these developments.
Competition first – the old certainty
Competition policy and antitrust rules are traditionally designed to protect certain market structures, with competitiveness expected to follow from competition, not replace it. As Margrethe Vestager, former Executive Vice-President of the European Commission, stated in 2024: “Competitiveness is borne out of free and fair competition. It is not engineered by distorting competition rules.”
With the above in mind, for years, European competition policy had a relatively stable approach to (big) consolidations. Mergers were assessed against a clearly defined benchmark: Whether they would significantly impede effective competition in the Single Market. Scale as such was never pursued as a policy tool but tolerated if it emerged from and was in line with competitive dynamics. With companies across different sectors facing increasing demands for scale, investment, and resilience, the question arises as to whether the current framework remains fit for purpose. Looking ahead, to what extent should this approach evolve? Against this backdrop, consolidation may increasingly emerge as a viable strategic response to today’s challenges – even in sectors that have traditionally been politically and regulatorily sensitive.
Scale and competitiveness – a shifting narrative
At the political level, the framing might have already started to shift, with growing calls to prioritise competitiveness and European Champions. This began already in 2019 when the Commission blocked Siemens/Alstom. At the time the Commission rejected such a line of argument und focussed on harm to competition in markets for railway signalling systems and high-speed trains. In the aftermath of the decision, the French Finance Minister Bruno Le Maire commented unhappy about on the decision and hinted at the politics´ stand, “The Commission took that decision, of course we will abide by that decision, but we will make very strong proposals to change the rules of competition and to allow European industrials to merge and to be stronger.” (read more on the desire for European Champions here).
Due to such political calls, the first draft of the new Merger Guidelines was expected with excitement. In the press release accompanying the draft, President von der Leyen reiterated her earlier stand and said: “[…] we must build the environment for Europe´s next champions.”. However, Teresa Ribera, Commissioner for Competition, appears to phrase this in a more nuanced way: “We cannot use merger operations as a substitute for market integration” and that mergers need to prove actual benefits, “And not just: I want to be big”. Looking at the draft, while is does not fundamentally depart from the established rules, it places greater emphasis on factors such as innovation, investment incentives and longer-term market dynamics. At the same time, it is not endorsing consolidation simply for the sake of scale.
A look at the case law
Let´s look at recent case law and if the political calls are already (or to some extend) reflected in enforcement practice. Recent cases show that regulators and politicians still do not necessarily support big mergers which might be seen as the only possible solution for financially problematic situations by the merging parties. As such, argumentations using “national interests” or the need for the creation of national or even European Champions are still an uphill battle in merger control proceedings.
Examples of this include BBVA/Banco Sabadell, Unicredit/Banco BPM and Unicredit/Commerzbank (read more on the European banking sector here). The BBVA/Sabadell (Spain´s second and fourth largest banks) case is particularly telling: The deal was approved by the Spanish Competition Authority (CNMC) following a Phase II review with extensive commitments to address risks both in services provided to customers as well as in payment method markets. Afterwards, the Spanish Ministry of Economy initiated a “third-phase” review, which allowed the assessment of economic concentrations considering criteria of general interest other than protecting competition. As a result of this interference and new remedies, according to the Spanish government aimed at protecting workers, companies and financial customers, the deal ultimately collapsed due to insufficient shareholder support. In fact, the Commission has opened an infringement procedure against Spain, arguing that the government’s handling of the transaction may infringe the free movement of capital. The Spanish “third‑phase” review is a peculiarity of national law, but it is emblematic of a broader pattern: large consolidation projects are of great interest to politics.
On the other hand, in the Orange/MásMóvil case, the Commission already showed considerable flexibility in the telecom sector well before the new Merger Guidelines. In the past, the Commission has long been cautious regarding “four-to-three mobile mergers” (meaning that before the merger, there were four market players of which only three would remain after the deal). In this case, however, the Commission was prepared to accept a solution that allowed a merger to go ahead, even though it initially involved a reduction from four to three players. Although one could argue that the remedies meant the market was not truly reduced from four to three players, as they enabled an MVNO to evolve into a full network operator, the case is still noteworthy. It illustrates a greater willingness by the Commission to accommodate consolidation where remedies can preserve or recreate competitive dynamics, rather than strictly preventing a merger.
Conclusion – a system managing tension
Whether all this amounts to a genuine policy shift remains to be seen. Case law suggests that decisions are still made on a case-by-case basis and there is no general shift in policy. At the same time, attempts to actively favour European Champions may face legal limits as European courts may find it difficult to accept a distinction between EU and non-EU companies under EU law.
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