Merger Control and Transactions in Green Markets

The European Commission (the Commission) is currently revisiting its guidelines on merger control. This reflects changes in the nature of European markets and a shift in European Union (EU) policy around specific areas such as digitalisation, market power, public policy and notably, sustainability. As part of this review process, two separate public consultations launched in early May 2025 seeking input on the principles that should underpin the revised guidelines. These consultations identify seven specific topics that the Commission is requesting feedback on, including sustainability and clean technologies.

There have always been challenges for the Commission (as with national competition authorities) in balancing the anticompetitive effects of a potential merger against the efficiencies claimed by the parties involved. In certain cases, this balance has become more delicate where the potential merger would have a direct impact on the attainment of sustainability goals. Reconciling competitiveness, sustainability and green industrial policy is a prominent theme in current Commission policy making (e.g., the Competitiveness Compass roadmap and the Draghi Report) and the Commission is becoming open to considering environmental and sustainability concerns as long as they are linked to the competitive dynamics and market realities of the potential merger notified to it under the EU merger rules.

Specific issues in green markets

A "green market" refers to a market for goods or services that are environmentally sustainable or have a reduced negative impact on the environment compared to conventional alternatives. These markets are often associated with innovative products, technologies, or services that contribute to environmental objectives (such as reducing carbon emissions, improving energy efficiency, etc.). In merger control, there are competition concerns specific to pioneering markets that regulators will take into account. The draft merger guidelines proposed by the Commission attempt to address these concerns in respect of transactions in green markets:

• Green killer acquisitions: A "killer acquisition" is a transaction in which a large, established company acquires a smaller, potentially competitive firm – often a start-up or a company with a promising new product or technology. Competition authorities fear that the primary intention of the acquirer is not to develop the acquired business, but rather to discontinue or neutralise its competitive threat. As with killer acquisitions in the digital sector, there is a risk in sustainable markets that the leading incumbents in decarbonised technologies would acquire disruptive innovators offering green products to slow them down or cherry-pick future “winners”.
• Reduced incentives to invest and innovate: Mergers that reduce competition in green markets can lead to decreased incentives for companies to invest in sustainable technologies and products.
• Foreclosure of access to green technologies: Where the buyer and the target operate at different points in the supply chain (i.e., vertical mergers), there is a risk that the buyer would deny access to its competitors to less carbon-intensive products or services that are provided by the company it has acquired. This could negatively impact the availability and affordability of sustainable products or green technologies to the end consumer.

These situations would lead to less competition in a green market, something which is needed to transition to a climate neutral, clean and sustainable economy.

How would the proposed guidelines impact merger control assessment?

The proposed guidelines, even if adopted, may not move the dial on the ongoing debate about whether competition law should take into consideration sustainability when assessing the competitive effect of a deal. The revised guidelines on sustainability would introduce the idea of ‘green efficiencies’ where the negative effects on competition are offset by the sustainability benefits of a transaction. For example, it may be that the acquisition will act as a stimulus for more innovative clean technologies or that there is a clean, more efficient resource across supply chains post-transaction. This could indicate a change of focus by the EU away from a strict competitive effects review. However, if the Commission is to take into account “out of market” benefits it will need to be convinced that those environmental benefits are concrete, linked to the merger it is considering, and will ultimately be to the benefit of consumers.

Alternatively, the proposed guidelines might be more impactful in influencing how the Commission or a national competition authority (assuming, as seems likely, they adopt the broad approach of the guidelines) defines the relevant market, before it proceeds to assess the effect on competition in that market. If environmental and sustainability features of a product are a differentiating factor, this may convince the Commission that the environmentally friendly products form part of a separate product market. The Commission has been reluctant to define markets in these terms in the past (see for example Case M.8788 Novelis/Aleris; Case M.9633 Aurubis/Metallo). By contrast, in Ireland, the Competition and Consumer Protection Commission (CCPC) has been open to a more sustainable equivalent product as occupying a separate product market (e.g., M/07/030 Glen Electric Limited/Glen Dimplex Group/Applied Energy Holdings Limited where heating products fired by renewable energy sources were treated as a separate and distinct market to gas-fired space heating).

The reach of the proposed guidelines is clearly intended to go beyond market definition. The draft assumes that the Commission’s methodology for carrying out a competitive assessment will involve the Commission quantifying green incentives and efficiencies, presumably so that they can be measured and act as a counterbalance to the potential anti-competitive effects of the deal. In this sense, the proposals signpost the EU’s wider industrial policy objectives. However, this would be a significant departure from the economic orthodoxy adopted by the Commission (and largely followed by the CCPC in Ireland) and it remains uncertain what practical impact the proposals will have on transactions.

The consultations on the proposed new guidelines are open for responses until 3 September 2025.

For further information in relation to this topic, please contact Damien Ryan, Senior Associate, or any member of the EU, Competition & Procurement team.

Date published: 2 July 2025