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Ideally, merger control should prevent any acquisition that weakens market competition. The current European Union merger control framework cannot always do this. Since 2000, online platforms that are now within the scope of the European Union’s Digital Markets Act (DMA), the designated have bought nearly 700 small, promising companies worldwide. Meanwhile, digital markets have become increasingly concentrated.  

In a paper published today, I argue that the DMA must be amended to protect infant challenges to big tech market power.  

The EU merger control framework was designed for a pre-digital world, where enforcers were preoccupied more with static concerns (ie concerns that a merger would remove an existing established competitor from the market) than with dynamic concerns (ie concerns that a merger would eliminate a source of potential competition in the future).  

In the digital economy, though, things change quickly. A barely known, small start-up which is not making much money today could become a credible challenger to an established platform tomorrow. In 2022, ChatGPT .

Most tellingly, the acquisition of a target company with a small turnover is, by design, not considered problematic. The Commission, which enforces EU merger control, doesn’t even need to be notified.  

EU merger control must be reinforced, making it suitable for the digital age. Yet, the question of how to do this is significant. Increased merger control involves administrative costs for stakeholders and competition authorities. It also runs the risk of mistakenly blocking acquisitions that would foster, rather than reduce, competition or innovation.

The European Commission could be empowered to scrutinise any acquisition performed by DMA gatekeepers. Moreover, gatekeepers would also bear the burden of proving that the merger is not harmful. This would leverage market players’ knowledge to help increase the accuracy of merger decisions in a highly dynamic and uncertain environment.

The Why Axis is a weekly newsletter distributed by Bruegel, bringing you the latest research on European economic policy.