EU competition lawyers warn Brussels that aging merger control rules risk blocking the creation of European AI champions capable of competing with US and Chinese rivals
Senior EU competition lawyers have publicly warned the European Commission that the bloc's merger control framework — grounded in the EU Merger Regulation (EUMR), which dates in its current form to 2004 — is structurally misaligned with the dynamics of the technology and artificial intelligence sector, according to a Law.com report. The core argument is that the EUMR's thresholds and substantive assessment criteria, designed for industrial-era market structures, are ill-suited to evaluate consolidation among AI companies where market power is determined by data assets, model capability, and computing infrastructure rather than traditional revenue or market share metrics. The warning arrives as the EU is simultaneously attempting to position itself as a global AI governance leader through the EU AI Act — the world's first comprehensive AI regulatory framework, which entered application in phases from 2024 — while also applying merger scrutiny to technology consolidation deals in ways that practitioners argue may prevent European companies from reaching the scale necessary to compete with US hyperscalers and Chinese state-backed AI developers. The tension identified by EU lawyers is a genuine structural problem: the same regulatory framework that is supposed to protect competition may be inadvertently preventing the formation of competitive European AI players. The debate directly parallels arguments being made in the UK, where the CMA (Competition and Markets Authority) has been developing its own approach to AI market dynamics through its Foundation Models review.
Why this matters
The call for reform of the EUMR in the context of AI consolidation is legally significant because it targets the substantive standard used to assess mergers — the 'significant impediment to effective competition' (SIEC) test — and asks whether that standard adequately captures harm and benefit in AI markets where traditional market share analysis is inadequate. For competition law practitioners, this creates advisory demand on two fronts: advising AI companies on how to structure transactions to survive merger review, and advising regulators on framework reform. The UK dimension is important because the CMA's Foundation Models review is developing parallel analytical tools, and the two regimes may diverge — creating a dual-track clearance challenge for cross-border AI M&A. Confidence is low given only a snippet of the Law.com article is accessible; the legal framework connections are drawn from what the headline and snippet support.
On the Ground
On an AI regulatory compliance or merger review matter, a trainee would draft regulatory impact assessment memos analysing how a proposed AI acquisition might be assessed under EUMR or CMA merger thresholds, prepare data processing agreement markups for AI tools used in the deal process, and assist with AI governance policy drafting for the combined entity post-merger.
Interview prep
Soundbite
If EU merger rules can't assess AI market power accurately, every major AI deal faces regulatory risk based on the wrong analytical framework.
Question you might get
“How does the EU Merger Regulation's SIEC test apply to a merger between two AI companies, and why might traditional market share analysis be an inadequate tool for assessing competition in AI markets?”
Full answer
EU competition lawyers are arguing that the EU Merger Regulation's substantive assessment criteria — designed for industrial markets — cannot accurately evaluate AI sector consolidation, where power derives from data, compute, and model capability rather than revenue or market share. This matters because it means AI companies face merger clearance processes that may block or condition deals based on an analytically flawed picture of the market. The wider picture is a structural tension between the EU AI Act — which positions Europe as an AI governance leader — and merger rules that may prevent European AI companies from achieving the scale needed to compete. The UK's CMA is developing parallel analytical tools through its Foundation Models review, raising the prospect of divergent UK and EU approaches that create a dual-track regulatory burden for international AI transactions.
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