Europe’s telecoms sector urges a forward-looking approach to mergers to drive investment and innovation across the EU

Modernising the EU Merger Control Framework – so that the benefits of a merger on investment, innovation and resilience are taken into account – is essential for strengthening Europe’s competitiveness. However, the current plans for revising the merger guidelines do not go far enough. A comprehensive reform of the EU Merger Regulation is paramount to provide companies operating within the Single Market with greater legal certainty when it comes to achieving scale. 

We share the conclusions of Mario Draghi and Enrico Letta, who underline that the link between competition, investment and innovation is non-linear, particularly in capital-intensive sectors like telecoms. Their converging view is clear: facilitating consolidation is essential to unlock higher levels of investment in connectivity. In our view, the Commission must therefore shift its focus from value-destroying remedies to creating value by recognising efficiencies that foster investment and innovation.

Europe’s telecoms market consists of more than 100 operators, each serving on average 5 million subscribers – compared to 450 million and 110 million subscribers per operator in China and the USA, respectively. The inability of telecom operators to gain scale in European markets limits the long-term certainty required to make the significant investments needed to deliver state-of-the-art, secure and resilient connectivity to the continent.

The initial assumption that mergers lead to higher prices and lower consumer welfare also overlooks the fact that mergers can drive innovation and quality, and it fails to recognise the importance of scale and investment incentives for growth and productivity in certain sectors.

To ensure that the review of the merger framework delivers both for Europe’s economy and for its consumers, the European Commission should adopt a more flexible, forward-looking, and future-proof approach to merger reviews. This is why, in our submission to the consultation, we call for:

• A more dynamic and holistic approach to mergers, particularly relevant in industries with high capital intensity.

• A more long-term and forward-looking assessment that places a stronger focus on strategic investment and considers longer payback periods.

• A balanced approach to efficiencies, taking into account how a merger might impact future innovation, investment, competitiveness, resilience, security and defence-readiness, and other competition parameters that ultimately benefit consumers.

• An update to the EU Remedies Notice, to ensure coherence and clarity across the broader regulatory framework.

The global tech race is accelerating, and Europe risks falling further behind. Scale is essential to secure long-term investment and reignite the spirit of innovation that once positioned Europe at the forefront of digital progress. Outdated regulations now stand in the way of a competitive telecoms sector and a resilient European economy. We will work to provide even further empirical and theoretical evidence to support our views and contribute to a continued constructive dialogue with EVP Teresa Ribera and the Teams in DG Competition.