The EC is looking to establish a strong evidence base on the dynamic effects of mergers ahead of the much-anticipated review of its years-old guidelines
The EC has published a call for tenders for a study on the dynamic effects of mergers
On 25 March 2025, the EC published its call for tenders alongside specifications for a study on dynamic merger effects as it prepares for a long-awaited review of its horizontal and non-horizontal merger guidelines, which were issued in 2004 and 2008, respectively. The aim of the study is to provide the EC with an analytical foundation from which it can assess dynamic merger effects, as it looks to identify areas in which existing regulation could be adjusted to better support investment, innovation and productivity growth. The publication calls for the study to focus on dynamic effects specifically, rather than just on static effects, giving the example that while following a merger, price competition may be worsened (static), innovation competition may be strengthened (dynamic). The EC has also set out its desired structure for the study, splitting it into four key parts:
Synopsis: Assesses facts, figures, economic theories and empirical results regarding innovation, investment and competition;
Conceptual: Identifies circumstances when mergers may be likely to generate dynamic benefits or dynamic harms, illustrating specific economic mechanisms related to them;
Applied: Discusses the above factors that are relevant to the assessment of dynamic merger effects, using case study examples; and
Evaluation: Assesses which mechanisms may be expected in practice and where investment and innovation bottlenecks exist in certain sectors, detailing how EU merger control can overcome these bottlenecks.
The first two parts of the study will identify and analyse key factors and mechanisms behind relevant dynamic merger effects
The EC has emphasised the need for the synopsis part of the study to take a multi-disciplinary approach, using a variety of different academic literature from micro and macroeconomics, competition law and business literature. By relating the results of these different sectors to one another, implications based on all gathered evidence can be identified for potential changes to merger controls. The EC also calls for findings in the theoretical literature to be backed up by empirical evidence where possible. The second, and conceptual, part of the study will contain the study’s core research, highlighting factors that can be pragmatically applied during merger investigations. This part will examine the specific economic mechanisms that are at work in different types of efficiencies and harms that arise as a result of mergers. These may include investment efficiencies, theories of harm relating to innovation and ecosystems, as well as research and development (R&D) synergies. The study will explore specific mechanisms and factors behind dynamic merger effects such as the financial constraints of target firms and their ability to invest post-merger, different types of R&D production, investment incentives and factors that indicate whether dynamic effects are reinforcing or mitigating static effects.
Real-world case studies must be used to highlight the most relevant dynamic merger effects
The third part of the study should focus on the factors and mechanisms of dynamic merger effects based on real-world examples. This applied part of the study will give the winner of the tender the chance to employ their findings about the economic mechanisms and factors behind dynamic and static effects to previous merger cases. Where possible, effects in particular cases may be illustrated using complementary data. These case studies can help to identify the most relevant mechanisms and factors behind certain dynamic and static effects, making clear which of these are the most relevant to future EC decision-making on reviewing merger controls. Similarly to the synopsis section, the EC has called for case studies to be taken from different sectors, while keeping the total number of examples low. One potentially useful example could be the recent Three/Vodafone merger in the UK given the investigation by the Competition and Markets Authority (CMA) found rivalry-enhancing efficiencies stemming from the deal.
The EC has highlighted telecoms and AI as its favoured strategic sectors to evaluate the impacts of mergers
The EC has directed the final part of the study to be an evaluation of the economic mechanisms and factors that will be more or less likely to result in dynamic merger effects in practice. Linking to the conceptual part of the study, this evaluation will also discuss how EU merger control can help certain strategic sectors overcome innovation and investment bottlenecks. Although seemingly not a requirement, the EC does also list its preferred strategic sectors for the report to focus on, highlighting telecoms, AI (and other frontier technologies), pharmaceuticals and bioscience. While limiting the study’s scope to these strategic sectors, the evaluation will investigate how the consideration of dynamic merger effects can positively or negatively impact productivity and innovation in comparison to other – albeit, undefined – factors.
