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Rethinking efficiencies (part 1 of 3) – Who needs to get what?
Rethinking efficiencies (part 1 of 3) – Who needs to get what?
26 March 2026
Series
Blogs
26 March 2026
Authors: Will Leslie, Eoin O’Reilly, Claire Tobijanski
The starting point for efficiencies is whether a merger will improve market outcomes: will European consumers be better or worse off post-merger?
The answer is often likely to be straightforward: mergers may have significant benefits and no or limited restrictive effects on competition. But some cases involve trading off merger harms and benefits. This raises more tricky questions. What makes consumers better off? Is a cheaper medicine today worth more than a new medicine next year? Does a more resilient network or supply chain outweigh a loss of choice in certain areas or products? These issues are challenging because – whatever way a merger is decided in such cases – some consumers will win and some will lose. The key is how to evaluate and value the benefits for European consumers.
The 2004 guidelines erred towards a conservative approach. Efficiencies must be ‘substantial and timely’ and benefit, in principle, ‘consumers in the markets where competition concerns occur’. The Commission’s strict approach to out of market benefits appears to be based on Mastercard case law on 101(3) TFEU in support of its view that out-of-market efficiencies can only be accepted if the benefits ‘cover substantially the same customers otherwise harmed by the merger’ To be considered, efficiencies generally had to focus on short term price effects in the market(s) where harm arises. Longer-term non-price effects (e.g. innovation, resilience and sustainability) and out-of-market efficiencies do not fit easily in this framework and, in practice, they have been deemed irrelevant in the Commission’s cases which have, in almost all instances, dismissed efficiencies entirely.
This policy choice may have made sense at the introduction of the 2004 guidelines. Indeed, looking back, the 2004 reform might have been focused on (provable) price effects. More generally, a policy that put greater emphasis on protecting consumers from more certain, short-term harm fit well with a merger control regime focused on short-term effects. It ensured that the efficiencies defence focused on the more easily quantifiable consumer benefits resulting from lower costs which could be tallied against any higher price effects. Moreover, from an enforcement perspective, it was deemed more appropriate to remedy harm without having to engage in a more difficult exercise of balancing benefits and harms across multiple groups of consumers.
The 2004 guidelines do, however, make it difficult to address “hard” cases. What if it is not possible to remedy the harm while preserving the benefits of a merger? This is important where a non-remediable harm in one market is inherently linked to broad efficiencies across all markets. The argument in favour of considering out-of-market efficiencies in those cases seems obvious: where total efficiencies mean that the merger is net positive for consumers, why not approve? The argument for looking at longer-term benefits has also improved: since the 2010s, the Commission has increasingly examined whether mergers may harm competition in the long run. It seems anachronistic to dismiss long-term benefits whilst emphasising those long-term harms.
However, the Commission’s approach to efficiencies in, for example, Orange / MásMóvil appears to continue a conservative approach that constrains what constitutes a suitable merger benefit. In particular, the Commission held that efficiencies should be “allocated” to the relevant markets where they accrue. This seems to assume that the balancing exercise is purely quantitative and must be carried out separately for each relevant market.
This is too rigid. The EU Courts have accepted that the EUMR confers a discretion to assess efficiencies without requiring the Commission to define in advance and in the abstract the relevant criteria. Mastercard requires only that there is some “appreciable objective advantage” for the relevant user group to bring benefits for other user groups into play for an overall balancing exercise. In other words, where a merger creates objective benefits for different user groups – including those potentially harmed – the Commission should consider the overall balance across all users (unless those harms can be remedied without compromising the benefits). The Courts likewise accepted that the benefits for some consumers in future markets could be traded off against potential higher prices in existing markets in GSK Spain.
The Commission’s approach to antitrust efficiencies has even been criticised by AG Emiliou in RRC Sports, who argued that the 2004 guidelines may be “too strict”. While the CJEU judgment is pending, the view from the AG is that: (i) the balancing exercise involves the weighting of various benefits and was not one of “pure arithmetic”, given it may not be possible to assign a precise monetary value to a benefit (e.g. product improvements), and (ii) it would be inconsistent with the Treaties and establish case-law to disregard benefits of a non-economic nature. Admittedly, this involves the balancing of harm and benefit under Article 101(3) TFEU but there is no reason why that should not be the same for mergers.
The Commission need not fetter its own discretion in setting what does and doesn’t constitute acceptable efficiencies in the revised guidelines. This would give the Commission the flexibility to make the right policy choices in “hard” cases. It is impossible to predict the cases and choices with which the Commission will be faced in the future. At this juncture, a policy that gives the authority greater flexibility in deciding whether to permit or prohibit a merger seems the better choice.