{"id":1833,"date":"2026-04-11T16:26:42","date_gmt":"2026-04-11T16:26:42","guid":{"rendered":"https:\/\/www.europesays.com\/spain\/1833\/"},"modified":"2026-04-11T16:26:42","modified_gmt":"2026-04-11T16:26:42","slug":"eu-merger-control-a-catalyst-for-innovation-and-growth-in-europe","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/spain\/1833\/","title":{"rendered":"EU Merger Control: A catalyst for innovation and growth in Europe?"},"content":{"rendered":"\n

As outlined in our previous posts, Telef\u00f3nica\u2019s proposal for revising the Merger Guidelines<\/a> rests on two key paths for a needed evolution. First, the Commission must embrace the full concept of consumer welfare\u2014encompassing price, quality, choice, and innovation\u2014throughout every stage of the merger control assessment. Second, and essential to achieving the first, the economic framework underpinning merger control analysis must be fundamentally redefined.<\/p>\n

Building on these two pillars, broader Commission objectives\u2014such as resilience, innovation, investment, sustainability and security as outlined in the Mission Letter to Teresa Ribera\u2014could be integrated into the assessment. How? By ensuring these objectives are reflected, case by case, within the consumer welfare parameters that should be evaluated throughout all stages of the merger review, under a dynamic efficiency approach.<\/p>\n

To mark the launch of our Policy Brief, this post will explore the role that investment, innovation, and scale should play as drivers of competitiveness and resilience in merger control.
But first, we would like to share a snapshot of Telef\u00f3nica\u2019s technical proposal for the Guidelines review, the full version of which is also included in the Policy Brief.<\/p>\n

Overview of Telef\u00f3nica\u2019s technical proposal for the revision of the Guidelines Loss of competition: the Commission needs to assess the pre-merger and post-merger conditions for competition in price but also in quality, innovation and choice. This would involve conducting a comprehensive analysis of the supply side of companies and sectors, i.e. an analysis of what is their function of production and their capabilities for competing pre- and post-merger.Efficiencies: the Commission should analyze efficiencies considering all dimensions of consumer welfare and the features of the supply side case by case, under a standard of proof which makes feasible their recognition and considering out-of-market efficiencies which drive several benefits to consumers and businesses even beyond the markets where the merger takes place.Remedies: a merger would generally enhance the parties\u2019 scale, investment capabilities, and incentives to compete across all dimensions of consumer welfare. However, where the Commission may have doubts regarding the parties\u2019 post-merger incentives, investment-related remedies could help to ensure that the resulting entity channels its increased investment capacity\u2014resulting from synergies\u2014towards key EU objectives, including competitiveness, sustainability, resilience, and strategic autonomy.What role should investment and innovation play in merger control? <\/p>\n

The Competitiveness Compass<\/a> has explicitly stated that \u201cEurope is losing its growth engines at the very moment when it faces massive investment needs for modernising its economy, financing the green and digital transition, and ensuring its security\u201d.<\/p>\n

In this regard, investment and innovation are vital to safeguarding Europe\u2019s economic power. Both elements share a defining trait: they drive continuous change in products, services, and technologies\u2014introducing uncertainty and requiring new processes and knowledge.<\/p>\n

Evaluating investment and innovation through a static lens or applying price-based KPIs overlooks their dynamic nature and risks missing their true and full impact. Therefore, Telef\u00f3nica believes it is essential that investment and innovation are thoroughly examined in the Commission\u2019s merger investigations, with a strong focus on the supply side of companies and sectors. Such analysis should look at:<\/p>\n

Industry-specific dynamics: Investment and innovation processes vary significantly across industries and technologies, requiring tailored analytical approaches.Firm-level heterogeneity: Companies possess distinct capabilities, skills, and resources that shape their innovation and investment strategies.Uncertainty and risk: Investment and innovation processes are inherently uncertain and risky, making it impossible to define optimal decisions in advance. Instead, firms often rely on trial-and-error approaches.Parameter beyond market structure: Most importantly, market structure is just one of many factors influencing investment and innovation<\/a>.What role does scale play in driving Competitiveness and Resilience? <\/p>\n

By unlocking synergies, reducing costs, increasing scale and improving access to capital, mergers help firms achieve greater levels of productivity. Particularly, for firms with high fixed costs, mergers are sometimes critical to their long-term viability.In such cases, it becomes crucial to conduct a thorough analysis of the production function of each sector, as it directly affects companies\u2019 ability to scale up within the relevant markets and to drive competitiveness.<\/p>\n

For instance, in telecoms, scale is everything<\/a>. To run and expand a network, operators need a minimum number of customers \u2014 that\u2019s the \u201ctake-up.\u201d When telco companies merge, the goal is clear: grow that customer base. More take-up means better returns, which can be reinvested in innovation and networks development, enhancing the competitiveness of the sector and sustaining the digital transformation of many other industries.<\/p>\n

Resilience refers to the capacity to withstand, adapt to, and recover from disruptive events while maintaining core functions. When such uninterrupted service matters to customers, resilience becomes a true competitive advantage. Its relevance varies by sector, production function, and the critical importance of the products or services. When companies compete by investing in more resilient products and services, resilience becomes a strategic parameter that necessarily needs to be factored into merger control analysis. By improving the ability to invest, scale is key to enhance resilience.<\/p>\n

Following with the telecoms example, resilience is vital for ensuring the uninterrupted delivery of essential services that enable the proper functioning of the economy. As both consumers and the society value reliable networks, operators compete to meet these expectations by maintaining service even in challenging conditions. A thorough supply-side analysis of the telecom sector should therefore recognize resilience as a key competitive parameter and take-up as the mean to achieve investment capacity to ensure it.<\/p>\n

We are pleased to publish our Policy Brief and willing to contribute to the Commission\u2019s revision of the Guidelines. Telef\u00f3nica sees this review, together with the application of the new approach in specific cases, as a pivotal element in the Commission\u2019s efforts to strengthen competitiveness, foster investment and innovation, and advance Europe\u2019s strategic autonomy.<\/p>\n

In the next post we will delve deeper into sustainability.<\/p>\n","protected":false},"excerpt":{"rendered":"As outlined in our previous posts, Telef\u00f3nica\u2019s proposal for revising the Merger Guidelines rests on two key paths…\n","protected":false},"author":2,"featured_media":1834,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[124],"tags":[292,1029,66,521,155],"class_list":{"0":"post-1833","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-telefonica","8":"tag-competition","9":"tag-consolidation-and-scale","10":"tag-europe","11":"tag-public-policy","12":"tag-telefonica"},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/spain\/wp-json\/wp\/v2\/posts\/1833","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/spain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/spain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/spain\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/spain\/wp-json\/wp\/v2\/comments?post=1833"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/spain\/wp-json\/wp\/v2\/posts\/1833\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/spain\/wp-json\/wp\/v2\/media\/1834"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/spain\/wp-json\/wp\/v2\/media?parent=1833"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/spain\/wp-json\/wp\/v2\/categories?post=1833"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/spain\/wp-json\/wp\/v2\/tags?post=1833"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}