Brussels seeks powers to block ‘killer acquisitions’ in Europe and beyond

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Brussels plans to expand its powers over merger deals in order to stop “killer acquisitions” that pose risks to start-ups in Europe and beyond, according to people familiar with the discussions.

The European Commission, the EU’s top competition enforcer, has pledged to overhaul its rule book on mergers and acquisitions for the first time in decades, including by revising when and where it can intervene on deals.

The reforms under discussion would aim to significantly extend the commission’s jurisdiction to mergers involving companies that generate most of their revenue outside Europe, three people familiar with the plans told the Financial Times.

One option under consideration would be to introduce a new threshold for taking over scrutiny of a merger, which would be based on the value of the deal rather than relying on the existing turnover criteria, the people said.

While the details of the reforms are still being debated, one of the priorities for the EU’s incoming competition chief, Teresa Ribera, will be addressing the threat of so-called “killer acquisitions”.

Commission president Ursula von der Leyen urged Spain’s nominee in her mission letter to tackle the risks of foreign companies attempting to take over smaller rivals in order “to eliminate” competition.

The proposed changes come after Brussels claimed jurisdiction over biotech company Illumina’s $8n acquisition of cancer screening start-up Grail, even though both are based in California and lacked revenues or presence in Europe. Brussels lost its case after the EU’s top court said it had no legal basis to scrutinise the transaction, leaving officials scrambling for options.

Companies hope the revised rules will bring legal certainty by clarifying when transactions must be notified to the commission, mainly in cases where small but high-growth potential companies are bought by larger incumbents. 

But some officials are worried such reforms would open a “Pandora’s box” — giving EU member states the possibility to introduce reforms that are favourable to their markets, or shift powers from Brussels to national competition authorities.

Other EU officials have discussed giving the commission more powers to call in mergers even without the prior consent of member states — a less palatable option since it is likely to face opposition from countries such as France and Germany.

Any reforms will still need the commission, the EU’s executive, to start the formal consultation process, and it could take years before any changes happen, the people said. Ribera would first need to be in office, with the legislative process expected to start next year.

A commission spokesperson declined to comment.