EU Merger Guidelines data: ecosystem theories, killer acquisitions and the CMA gap
In short: the draft EU merger guidelines data and digital deals reset puts ecosystem theories of harm, killer acquisitions and innovation competition at the centre of the substantive test, and introduces an Innovation Shield that protects most start-up acquisitions subject to conditions. The CMA reached similar ground in case practice on Microsoft Activision and Adobe Figma, but the UK now also has the SMS regime under the DMCC Act 2024 sitting alongside merger control.
For UK platform, AI and data-rich deals with EU jurisdiction, the substantive test for clearance sits in Brussels. The European Commission is rewriting that test, and the rewrite matters more for data and digital deals than for any other class of transaction. The proposed EU Merger Guidelines give greater weight to ecosystem theories of harm, killer acquisitions and loss of innovation competition, and introduce an Innovation Shield that protects most acquisitions of small innovative firms subject to specific conditions. The UK position has been ahead of the Draft in case practice but works through different instruments. UK platform M&A with EU jurisdiction now needs both arguments made.
Regulatory background and consultation timing
EU merger control sits in Council Regulation (EC) 139/2004, the EU Merger Regulation. Article 2 of Council Regulation 139/2004 requires the Commission to assess whether a concentration significantly impedes effective competition in the internal market. Commission Guidelines explain how the Commission applies the test in practice. The 2004 Horizontal and 2008 Non-Horizontal Merger Guidelines have governed assessment for two decades. On 30 April 2026 the Commission published a single Draft Communication consolidating both, opened a public consultation and invited feedback by 26 June 2026. Final adoption is expected later in 2026.
The UK position runs in parallel after Brexit. UK deals are caught by Part 3 of the Enterprise Act 2002, with the Competition and Markets Authority applying the substantial lessening of competition test under sections 35 and 36. The Digital Markets, Competition and Consumers Act 2024 raised the target turnover threshold to £100 million and added a 33%/£350 million hybrid test in section 23A from 1 January 2025. Part 1 of the same Act introduced a separate Strategic Market Status (SMS) regime under which the CMA can impose conduct requirements and merger reporting obligations on designated firms. The CMA Merger Assessment Guidelines (CMA129, 2021) apply to merger control unchanged.
Analysis: three EU merger guidelines data shifts that matter for platform deals
The Draft Guidelines do three substantive things that bear directly on data and digital deals.
First, loss of innovation competition is now a free-standing theory of harm at Section II.B.4 of the Draft. The Commission may find a SIEC where the merger impedes the process of innovation rivalry, the overall innovation capabilities and efforts in the industry, or the parameters of competition in future products. Killer acquisitions and reverse killer acquisitions are explicitly named at paragraph 184. Section II.B.4.3 introduces an Innovation Shield: where a transaction involves a small innovative company, including a start-up, or an R&D project with dynamic competitive potential, the Commission in principle does not find a SIEC subject to defined conditions. The conditions at paragraph 192(a) to (e) are alternatives, and any one being satisfied is enough for the shield. The thresholds bite at different levels: a 40% market-share ceiling on the merging parties combined with at least three other independent R&D firms of similar competitive potential under paragraph 192(b); a separate 25% combined market-share ceiling for R&D capabilities under paragraph 192(d). Where the (b) primary test is not met but the target is a start-up, a fallback allows the shield to apply provided the acquirer is not the largest firm in the relevant market or a gatekeeper.
Second, ecosystem theories of harm are now formal. Section II.B.7 deals with entrenchment of a dominant position when a merger structurally creates or reinforces existing barriers to entry and expansion in a core market or across closely related markets. Section II.B.9.2 covers portfolio effects and ecosystems built around a core service with multiple complementary offerings. Foreclosure analysis at Section II.B.6 keeps the established ability-incentive-effect framework but applies it to data inputs and platform access alongside traditional supply-chain inputs. The Draft does not name “data-as-asset” as a free-standing theory, but treats data within privacy as one of the parameters of competition (capacity, investment, innovation, privacy, sustainability and resilience including security of supply) and engages it through ecosystem and foreclosure analysis.
Third, loss of potential competition at Section II.B.5 is more carefully drawn than in the 2004 Horizontal Guidelines. The theory captures the elimination of an actual or future constraint from a competitor not yet active in the relevant market. The framing is well-suited to AI start-up acquisitions where the target is pre-revenue but a credible future competitor; it sits adjacent to but separate from the Innovation Shield’s protective treatment of small innovative firms.
| Theme | EU Draft Merger Guidelines (30 April 2026) | UK position (CMA129 + DMCC Act 2024) |
|---|---|---|
| Ecosystem and portfolio effects | Section II.B.9.2 explicit framework for assessing ecosystems built around a core service with complementary offerings; Section II.B.7 entrenchment of dominant position in a core market or across closely related markets | SLC test under EA 2002 ss.35-36; CMA case practice has applied ecosystem analysis without formal Guidelines language (Microsoft Activision Phase 2 decision, April 2023; Adobe Figma provisional findings, 2023 prior to abandonment) |
| Killer acquisitions and start-up M&A | Innovation Shield at Section II.B.4.3 protects most acquisitions of small innovative firms subject to conditions: acquirer not a gatekeeper or largest firm; R&D overlap with at least three other firms; combined innovation-space share under 25% | Hybrid acquirer-foothold test in EA 2002 s.23A captures killer-acquisition risk above 33% UK supply share and £350 million UK turnover; SMS-firm reporting under DMCC Act 2024 Part 1 mandatory and suspensory for designated firms |
| Innovation competition | Section II.B.4 free-standing theory of harm; SIEC where merger impedes innovation rivalry, overall innovation capabilities or future-product parameters of competition | CMA Adobe/Figma was the leading UK innovation-competition case before the Draft; CMA129 has innovation as a parameter of competition but no equivalent dedicated section |
| Data and parameters of competition | Capacity, investment, innovation, privacy, sustainability, resilience including security of supply explicitly enumerated; data engaged through privacy and ecosystem analysis rather than as a free-standing parameter | CMA129 lists price, output, quality, range and innovation; data and privacy not enumerated; CMA case practice has treated data inputs through foreclosure and innovation theories |
| Conduct overlay on designated firms | EU DMA (Regulation 2022/1925) imposes per-se obligations on designated gatekeepers under Articles 5 to 7; AI Act, Digital Services Act, P2B Regulation and Data Act cover adjacent surfaces; DMA Article 14 imposes a notification (not suspensory) merger obligation on gatekeepers | SMS regime under DMCC Act 2024 Part 1; conduct requirements and PCI orders are bespoke; first SMS designations on 22 October 2025 (Apple and Google mobile platforms); first commitments accepted 1 April 2026; SMS firms also subject to mandatory and suspensory merger reporting under Part 1 |
EU merger guidelines data: implications for UK platform and AI deals
For UK platform, AI and data-rich M&A with EU jurisdiction, three sets of implications follow.
Acquisitions of AI start-ups by gatekeeper acquirers face a narrower path to the Innovation Shield. The (b) primary test is open to gatekeepers if the parties combined are below the 40% market-share threshold and at least three other independent R&D firms with similar competitive potential remain in the market. Conditions (c), (d) and (e) are also open. The fallback under (b) for start-up acquisitions where the primary test is not met expressly excludes gatekeeper acquirers and the largest firm in the relevant market. The Draft therefore puts the AI start-up acquisition path on a substantive route through the Shield’s alternative conditions rather than a presumption-based clearance for gatekeeper-buyers. Our regulatory due diligence page sets out the scope on EU and UK competition risk in data and AI deals.
Ecosystem framings now sit on both sides of the Channel. The CMA reached the substantive ground first in Microsoft / Activision Blizzard, where the Phase 2 decision of 26 April 2023 found a substantial lessening of competition in cloud gaming on input-foreclosure grounds; clearance came on 13 October 2023 only after Microsoft divested Activision’s cloud streaming rights to Ubisoft outside the EEA. Adobe / Figma was the leading UK innovation-competition case; the parties abandoned the deal on 18 December 2023 after the CMA’s provisional remedies notice gave only prohibition or a divestiture amounting to prohibition. The Draft brings the Commission’s analytical framework into alignment with the practical reality the CMA was already operating in. UK and EU positions on ecosystem M&A are converging on substance.
The conduct-regulation overlay sits on both sides of the Channel through different instruments. The EU’s Digital Markets Act (Regulation 2022/1925) imposes per-se obligations on designated gatekeepers under Articles 5 to 7, with the AI Act, the Digital Services Act, the P2B Regulation and the Data Act fleshing out adjacent surfaces. The UK SMS regime under DMCC Act 2024 Part 1 covers similar ex-ante ground through bespoke conduct requirements crafted by the CMA. The genuinely UK-unique element on platform M&A is the mandatory and suspensory merger reporting overlay on SMS firms under DMCC Act 2024 Part 1: SMS designation triggers reporting at defined consideration and shareholding thresholds and the deal cannot complete during the standstill. Article 14 of the DMA imposes a notification obligation on gatekeepers but that is informational rather than suspensory, and the EUMR jurisdictional thresholds continue to control whether a Commission filing is required. Apple and Google were designated SMS in respect of their mobile platforms on 22 October 2025; first commitments under the regime were accepted on 1 April 2026.
Viewpoint
The Innovation Shield is the most commercially significant shift in the Draft for data and digital deals. It formalises a “you can buy a small innovative start-up” path that the 2004 Guidelines did not have. The structure is the practical issue: the conditions are alternatives rather than narrowing constraints, and each route has its own threshold (40% market-share with three independent R&D firms under (b); 25% combined market-share for R&D capabilities under (d)). The fallback for gatekeeper-acquirer cases is the only place the shield is closed off by acquirer identity. Buyers drafting effort covenants and reverse break fees on AI and data-platform deals will need to identify the route through the conditions on each deal rather than relying on the shield as a general presumption.
For UK platform M&A, the Draft and the SMS regime point in different directions. The Draft tightens substantive merger analysis on platform and data-rich deals; the SMS regime adds an ex-ante conduct overlay on UK-active platforms separate from merger review. The EU’s Digital Markets Act imposes a comparable conduct overlay on gatekeepers under Articles 5 to 7 of Regulation 2022/1925, and the AI Act, Digital Services Act, P2B Regulation and Data Act sit alongside it. Anyone advising on a deal involving a DMA-designated gatekeeper or an SMS-designated firm now manages substantive merger control in two registers plus parallel conduct-regulation regimes on each side of the Channel. The UK-unique lever on platform M&A is the mandatory and suspensory SMS merger-reporting trigger. The cross-cutting telecoms post in this series covers the same recalibration through the telecoms operator and infrastructure lens; the data and digital perspective is the version most likely to bind specifically on AI and platform investors.
Contact
For advice on EU and UK merger control on data, AI and platform transactions, contact Rob Bratby at Bratby Law. We also advise on data protection and transactions across the UK and EU regulatory layers.
