Dynamic Merger Control after Draghi: A Critical Appreciation of the Oxera Study on the Dynamic Effects of Mergers

Jorge Padilla recently authored an article examining the European Commission’s Economic Study on the Dynamic Effects of Mergers. He welcomes the Study as an important contribution to EU merger control, while arguing that its framework does not fully account for efficiencies, restructuring, resource reallocation, and the challenges facing declining industries. He proposes an approach that assesses dynamic harms and benefits under the SIEC test, includes greater symmetry in the treatment of uncertainty and provides a more disciplined framework for investment remedies.

The views expressed in this article are the sole responsibility of the author and cannot be attributed to Compass Lexecon or any other parties.

Abstract

The European Commission's two-volume Economic Study on the Dynamic Effects of Mergers, prepared by Oxera with Professors Otto Toivanen, Yassine Lefouili and Leonardo Madio, is an ambitious and valuable contribution to the modernisation of EU merger control. It synthesises an unusually wide literature and gives dynamic harms and benefits a common language based on expected consumer welfare. I am particularly grateful for its careful and generous engagement with my recent work on merger efficiencies. My central criticism, however, is that the Study is more successful as a map of mechanisms than as a decision rule. Its operative framework excludes the ex ante effects of merger policy; applies merger specificity through a potentially inconsistent counterfactual; states evidentiary symmetry more clearly than it implements it; and treats balancing and remedies too lightly for the weight they must bear. It is also dynamic mainly on the expansion margin. Zombies, flailing divisions, declining industries, structural excess capacity, orderly restructuring and resilience remain peripheral. In light of the Draghi Report, this matters: Europe's productivity challenge concerns diffusion, scaling and resource reallocation as well as invention. The revised Merger Guidelines should use a single, probability-weighted counterfactual for harms and benefits, integrate efficiencies into the competitive assessment, recognise contraction and reallocation mergers, treat uncertainty symmetrically, and provide a disciplined framework for investment remedies. That would not make merger control permissive. It would make it neutral, economically complete and more faithful to the SIEC test.