Competition Law and Future Competition Analysis in Mergers

1. Introduction

Merger control is moving from a predominantly static analysis of current market shares and prices toward a more forward-looking assessment of innovation, potential competition, ecosystems, data, technology, entry, network effects, and market structure.

Traditional merger analysis generally asks:

Will the transaction substantially lessen or impede competition in an identifiable existing market?

Future merger analysis increasingly asks additional questions:

• What competition would exist five or ten years after the transaction?
• Is the target a potential future competitor?
• Will the acquisition eliminate an important innovation pathway?
• Does the transaction strengthen an ecosystem rather than merely increase market share?
• Can control of data, APIs, cloud infrastructure, AI models or standards foreclose rivals?
• Does a transaction involving a small or emerging company create a future competitive bottleneck?
• Are conventional turnover or asset thresholds capable of detecting strategically important acquisitions?

The European Commission is currently reviewing its merger guidelines, with draft revised guidelines published on 30 April 2026. Its accompanying work specifically examines dynamic effects on innovation, investment, entry and exit, future product-market competition, and entrenchment.

2. Meaning of Future Competition Analysis

Future competition analysis examines the likely competitive consequences of a merger not merely on existing competitors and existing products, but on future competitive conditions.

It therefore incorporates:

1. Potential competition
2. Innovation competition
3. Nascent competitors
4. Dynamic market evolution
5. Network effects
6. Data advantages
7. Platform ecosystems
8. Technological convergence
9. Vertical and conglomerate effects
10. Entry and expansion possibilities
11. Future efficiencies
12. Long-term consumer welfare

The central distinction is:

3. Legal Foundations

Future merger analysis operates through traditional merger-control statutes rather than necessarily requiring a completely new legal category.

European Union

The principal framework is the EU Merger Regulation (EUMR), particularly the concept of a significant impediment to effective competition (SIEC).

The Commission's current review recognises that digitalisation, globalisation and decarbonisation have changed competitive dynamics and that merger assessment needs to account for innovation, investment, market entry and future competition.

United States

The principal framework is Section 7 of the Clayton Act, which addresses acquisitions whose effect may substantially lessen competition or tend to create a monopoly.

The US approach increasingly considers:

• potential competition;
• innovation;
• nascent competitors;
• vertical foreclosure;
• platform effects;
• data;
• future market development.

United Kingdom

The UK merger regime under the Enterprise Act 2002 permits analysis of whether a transaction results or may be expected to result in a substantial lessening of competition.

The CMA has therefore developed substantial experience with:

• nascent competition;
• digital platforms;
• innovation;
• ecosystem effects;
• vertical foreclosure.

4. Why Traditional Market-Share Analysis Is Insufficient

A merger between two companies may appear harmless if the acquired company has only a small current market share.

For example:

Company A = 70%
Company B = 2%
Other firms = 28%

A conventional analysis might initially regard Company B as insignificant.

But suppose Company B possesses:

• superior AI technology;
• an emerging substitute;
• valuable data;
• a disruptive business model;
• a rapidly growing user base;
• an important patent portfolio; or
• the potential to become a major competitor.

The acquisition could therefore eliminate future competition even though the target's present market share is only 2%.

This is the central problem associated with so-called killer acquisitions.

5. Major Dimensions of Future Merger Analysis

A. Potential Competition

The first question is whether the target could become an important competitor independently.

Authorities may examine:

• investment plans;
• R&D expenditure;
• product pipeline;
• patents;
• engineering capabilities;
• customer acquisition;
• expansion plans;
• internal documents;
• financing;
• technological capabilities.

The relevant counterfactual is not simply:

"What is the target doing today?"

but:

"What would the target probably have done absent the acquisition?"

6. Innovation Competition

Innovation may itself constitute an important dimension of competition.

A merger may reduce:

• R&D rivalry;
• product experimentation;
• technological alternatives;
• patent competition;
• innovation incentives;
• development of competing products.

This is particularly important in:

• pharmaceuticals;
• biotechnology;
• AI;
• semiconductors;
• telecommunications;
• cloud computing;
• clean technology;
• batteries;
• autonomous vehicles.

The Illumina/GRAIL litigation illustrates the importance of innovation theories in merger control. The authorities were concerned that Illumina's acquisition could reduce innovation and competition in emerging cancer-detection technology.

7. Data as a Future Competitive Asset

Modern mergers may involve little traditional physical overlap but substantial data advantages.

Relevant questions include:

• What data will the merged company control?
• Is the data difficult to reproduce?
• Does the data improve an AI model?
• Can rivals obtain equivalent data?
• Can the company combine datasets across markets?
• Will data aggregation increase switching costs?
• Does data create economies of scope?

Thus, future merger analysis must increasingly consider data accumulation as a source of competitive advantage.

8. Artificial Intelligence and Future Mergers

AI creates particularly difficult merger problems.

An AI acquisition may involve:

• foundation models;
• training data;
• GPUs;
• cloud infrastructure;
• AI applications;
• model weights;
• specialised datasets;
• developer ecosystems;
• AI agents.

A target may currently have little revenue but possess technology capable of becoming an important competitive constraint.

Future analysis should therefore examine:

Vertical effects

Cloud provider → AI model company

Horizontal effects

AI model provider → competing AI model provider

Conglomerate effects

Search platform → AI assistant

Ecosystem effects

Cloud + chips + models + applications + distribution.

9. Ecosystem Competition

Modern competition frequently occurs between ecosystems rather than individual products.

Examples include:

• mobile operating system + app store + payments;
• cloud + AI + enterprise software;
• search + advertising + browser;
• e-commerce + logistics + payments;
• gaming console + games + subscription + cloud gaming.

The Microsoft/Activision litigation illustrates the difficulty of assessing mergers where competition extends across multiple connected markets. The FTC alleged that Microsoft could use Activision's gaming assets to disadvantage competing consoles, subscription services and cloud-gaming services.

Recent academic analysis of Microsoft/Activision and Booking/eTraveli similarly highlights the growing importance of ecosystem-level merger assessment.

10. Network Effects

Future merger analysis must consider whether the transaction increases network effects.

Network effects arise when the value of a service increases as participation increases.

Examples:

• social networks;
• payment networks;
• marketplaces;
• app stores;
• online advertising;
• digital platforms.

A merger can therefore produce competitive harm even without an immediate price increase if it creates a stronger network that becomes increasingly difficult for rivals to challenge.

11. Entry and Expansion

Future merger analysis must ask whether competitors can realistically enter or expand.

Relevant barriers include:

• intellectual property;
• data;
• capital requirements;
• network effects;
• switching costs;
• interoperability restrictions;
• regulatory barriers;
• access to infrastructure;
• access to distribution;
• economies of scale.

A market with apparently low concentration may nevertheless be difficult to enter.

12. Dynamic Counterfactual Analysis

The counterfactual becomes particularly important.

Authorities may construct alternative scenarios:

Scenario 1 — Merger

A acquires B.

Scenario 2 — Independent development

B remains independent and expands.

Scenario 3 — Acquisition by another firm

B is acquired by another company.

Scenario 4 — Failure/exit

B fails independently.

The authority then compares the competitive effects of these scenarios.

This is considerably more difficult than traditional market-share analysis because the authority must predict uncertain future developments.

13. Six Important Case Laws

1. Illumina, Inc. v European Commission — Illumina/GRAIL

Court of Justice of the European Union, Joined Cases C-611/22 P and C-625/22 P

Facts

Illumina, a major genetic-sequencing company, sought to acquire GRAIL, which was developing early cancer-detection technology.

The transaction raised concerns even though GRAIL was not a conventional large established competitor.

Competition issue

The authorities examined:

• innovation;
• emerging technology;
• potential competition;
• vertical foreclosure;
• access to sequencing technology.

The Commission had prohibited the transaction over concerns concerning innovation and choice in emerging cancer-detection tests.

The Court of Justice subsequently held in September 2024 that the Commission could not use Article 22 EUMR in the circumstances to assume jurisdiction over a transaction that did not meet the relevant EU or referring Member State jurisdictional thresholds.

Principle

Future competition cannot be analysed independently of jurisdictional rules.

The case is particularly important for the future debate over killer acquisitions and below-threshold transactions.

14. 2. FTC v. Illumina/GRAIL

The US proceedings provide another important dimension.

The FTC alleged that the acquisition would diminish innovation in the emerging market for multi-cancer early-detection tests. The FTC ultimately required divestiture proceedings, while the Fifth Circuit's 2023 decision found substantial evidence supporting the Commission's anticompetitive conclusion but remanded on an issue concerning the treatment of Illumina's rebuttal evidence. Illumina subsequently announced divestiture.

Importance

The case demonstrates that:

A small or emerging company can represent significant future competitive pressure even where present market shares are not large.

15. 3. FTC v. Microsoft / Activision Blizzard

Facts

Microsoft proposed acquiring Activision Blizzard.

Activision possessed important gaming products including Call of Duty, while Microsoft operated Xbox, Game Pass and cloud-gaming services.

Competition concerns

The FTC argued that Microsoft could:

• restrict competing consoles;
• disadvantage competing subscription services;
• restrict cloud gaming;
• use Activision's content to strengthen Microsoft's ecosystem.

The FTC's administrative proceeding focused on these competitive theories.

The US district court refused the FTC's preliminary injunction, and the Ninth Circuit later considered the FTC's appeal.

Principle

The case illustrates how future merger analysis can extend beyond a single relevant market toward:

• ecosystems;
• vertical foreclosure;
• platform competition;
• cloud gaming;
• content distribution.

16. 4. Microsoft/Activision — European Commission

The European Commission adopted a different approach from the US litigation.

The transaction was allowed subject to commitments addressing competition concerns, particularly concerning cloud gaming.

Importance

The case demonstrates that merger outcomes can depend on:

• different institutional frameworks;
• different theories of harm;
• different assessments of remedies;
• different predictions concerning future market development.

It also demonstrates the importance of remedies designed around future market access rather than simply divesting existing assets.

17. 5. Booking Holdings/eTraveli

Facts

Booking sought to acquire eTraveli, a flight-booking platform.

The European Commission prohibited the transaction in 2023.

The Commission considered that the transaction would strengthen Booking's position in hotel online travel agencies and potentially increase the ability to leverage its position across related services.

Importance

The case demonstrates the increasing importance of:

• platform ecosystems;
• conglomerate effects;
• leveraging;
• network effects;
• multi-market competition.

It is particularly relevant to future merger analysis because the competitive effects may arise between connected markets rather than simply within the same market.

18. 6. NVIDIA/Arm

Facts

NVIDIA proposed acquiring Arm for approximately $40 billion.

Arm's technology was widely used by competitors in semiconductor markets.

The FTC challenged the transaction, arguing that NVIDIA could use control over Arm to disadvantage competing chip designers and preserve NVIDIA's position in important technology markets.

The transaction was ultimately terminated in February 2022.

Importance

The case demonstrates the importance of control over essential technological architecture.

A merger can raise serious competition concerns when the acquired company is not simply a competitor but provides technology used by numerous competitors.

19. 7. ThyssenKrupp/Tata Steel

The General Court upheld the Commission's prohibition of the proposed ThyssenKrupp/Tata Steel joint venture in February 2024.

The Commission had identified significant concerns in European steel markets, including automotive and packaging steel. The Court confirmed the Commission's assessment and found the proposed remedies insufficient.

Importance

The case demonstrates that future merger analysis is not restricted to digital markets.

It also applies to:

• industrial concentration;
• strategic sectors;
• capacity;
• innovation;
• supply security;
• market structure.

20. 8. NVIDIA/Arm and Future Technological Bottlenecks

NVIDIA/Arm is particularly important for future merger theory because it demonstrates the possibility that ownership of a technological input can affect competition downstream.

Future analysis should therefore ask:

Does the acquisition give the purchaser control over an infrastructure, standard, platform, technology or interface on which its competitors depend?

This question will become increasingly important for:

• AI chips;
• semiconductor designs;
• operating systems;
• cloud infrastructure;
• telecommunications standards;
• APIs;
• payment systems.

21. Future Competition Theories of Harm

Future merger control is likely to develop around several theories.

1. Killer acquisitions

An established company acquires a nascent competitor before it becomes significant.

2. Nascent competition theory

The target is not yet a substantial competitor but possesses the capability to become one.

3. Innovation foreclosure

The transaction eliminates an independent source of innovation.

4. Ecosystem foreclosure

The merger strengthens an ecosystem sufficiently to disadvantage rival ecosystems.

5. Data foreclosure

The merged firm obtains unique or difficult-to-replicate datasets.

6. Infrastructure foreclosure

The purchaser obtains control over an essential technological input.

7. Platform leveraging

Market power in one market is extended into another.

8. Vertical foreclosure

The merged company restricts rivals' access to inputs, customers or distribution.

9. Interoperability foreclosure

The merged firm reduces compatibility with rival products.

10. Standard-setting foreclosure

Control over technology or standards is used to disadvantage competing technologies.

22. Role of Market Definition in Future Merger Analysis

Market definition remains important but becomes more difficult.

A traditional analysis may define:

"Online hotel booking services."

A future analysis may need to understand an ecosystem consisting of:

hotels + flights + payments + advertising + loyalty + mapping + search + AI recommendation.

The challenge is avoiding two opposite errors:

Overly narrow market definition

This may exaggerate market power.

Overly broad market definition

This may conceal a significant competitive bottleneck.

Recent analysis of Booking/eTraveli and Microsoft/Activision has specifically identified ecosystem market definition as a central methodological issue.

23. Economic Tools for Future Merger Analysis

Competition authorities may increasingly employ:

A. Diversion ratios

To identify competitive closeness.

B. Upward Pricing Pressure

To estimate potential price effects.

C. Innovation models

To assess R&D incentives.

D. Event studies

To assess market reactions.

E. Econometric forecasting

To model future competition.

F. Network analysis

To understand ecosystem relationships.

G. Patent analysis

To assess technological competition.

H. User-level data

To analyse switching and multi-homing.

I. Counterfactual simulations

To model alternative post-merger outcomes.

J. Machine-learning tools

To identify patterns in large datasets, while maintaining transparency and evidentiary reliability.

24. Role of Remedies

Future merger analysis also changes the design of remedies.

Traditional remedies include:

• divestiture;
• licensing;
• access commitments.

Future-oriented remedies may include:

• API access;
• interoperability;
• data portability;
• non-discrimination;
• cloud-access commitments;
• licensing of technology;
• firewall arrangements;
• access to essential infrastructure;
• restrictions on exclusive dealing.

The Microsoft/Activision proceedings illustrate the importance of remedies directed at future access to gaming content and cloud services, rather than merely addressing an existing market-share problem.

25. Problem of Uncertainty

Future competition analysis creates a fundamental legal problem:

How far into the future should a competition authority predict?

The further the authority looks, the greater the uncertainty.

For example:

Year 0: Target has 2% share
↓
Year 2: 8%
↓
Year 5: potentially 20%
↓
Year 10: potentially a major competitor

But these projections may be uncertain.

Therefore, future merger analysis should distinguish between:

• demonstrable future plans;
• probable development;
• plausible scenarios;
• speculative possibilities.

Competition authorities should rely on evidence rather than purely hypothetical future harm.

26. New Threshold Problems

Traditional merger thresholds often depend on:

• turnover;
• transaction value;
• assets;
• market share.

These can miss acquisitions of companies with:

• low revenue;
• high technological value;
• valuable intellectual property;
• substantial data;
• rapidly growing user bases.

This is one reason the Illumina/GRAIL controversy became important in European merger law.

However, the Court of Justice's 2024 ruling also demonstrates that attempts to address such transactions must remain within the statutory allocation of jurisdiction.

27. Globalisation and Divergent Merger Decisions

Future merger control will increasingly involve multiple authorities.

A transaction may receive:

• approval in one jurisdiction;
• approval with remedies in another;
• prohibition in another.

Microsoft/Activision is an important example of divergent approaches across the US, EU and UK.

This creates problems concerning:

• regulatory uncertainty;
• transaction costs;
• conflicting remedies;
• global restructuring;
• forum strategy;
• international cooperation.

28. Sustainability and Future Competition

Future merger analysis may also incorporate:

• green innovation;
• clean technologies;
• energy transition;
• decarbonisation;
• climate-related investment;
• resilience.

The European Commission's current review specifically identifies decarbonisation among the economic transformations affecting merger analysis and has examined strategic sectors including biopharmaceuticals, quantum computing and clean technologies.

The challenge is to ensure that sustainability considerations remain legally and economically connected to merger assessment rather than becoming an unrestricted justification for approving or prohibiting transactions.

29. Autonomous and Algorithmic Markets

Future mergers may involve companies whose competitive decisions are increasingly automated.

Examples include:

• algorithmic pricing;
• AI purchasing systems;
• autonomous logistics;
• AI advertising;
• automated financial trading;
• autonomous procurement.

Merger analysis may therefore need to consider whether combining two algorithmic systems produces:

• common data advantages;
• reduced algorithmic rivalry;
• increased pricing coordination risks;
• reduced experimentation;
• algorithmic exclusion;
• greater entry barriers.

30. Future Merger-Control Framework

A possible analytical framework can be expressed as:

Transaction

↓

Jurisdictional threshold

↓

Market definition

↓

Current competitive position

↓

Potential competition

↓

Innovation analysis

↓

Data + technology analysis

↓

Network effects

↓

Vertical/conglomerate effects

↓

Ecosystem analysis

↓

Entry and expansion

↓

Dynamic counterfactual

↓

Efficiencies

↓

Competitive harm

↓

Remedies

↓

Final merger decision

31. Key Future Challenges

1. Predicting innovation

Authorities must distinguish realistic innovation trajectories from speculation.

2. Identifying nascent competitors

Small companies may have disproportionate future competitive importance.

3. AI concentration

AI development can create significant economies of scale and scope.

4. Ecosystem power

Competition may shift from individual markets toward competing ecosystems.

5. Data concentration

Data may become a central source of durable market power.

6. Below-threshold acquisitions

Important transactions may escape traditional notification thresholds.

7. Global regulatory divergence

Different authorities may reach different conclusions.

8. Remedy effectiveness

Behavioural remedies must remain effective as technology changes.

9. Evidentiary uncertainty

Future harm is inherently more difficult to prove than existing market effects.

10. Balancing innovation and competition

Authorities must avoid both excessive intervention and under-enforcement.

32. Conclusion

The future of merger control is likely to be more dynamic, technology-sensitive and ecosystem-oriented.

The traditional question:

"What is the market share after the merger?"

is increasingly supplemented by:

"What competitive process will disappear or be transformed because of the merger?"

Cases such as Illumina/GRAIL, Microsoft/Activision, Booking/eTraveli, NVIDIA/Arm and ThyssenKrupp/Tata Steel demonstrate different dimensions of this transformation.

The emerging framework therefore places greater importance on:

• potential competition;
• innovation;
• nascent firms;
• data;
• AI;
• network effects;
• ecosystem power;
• technological infrastructure;
• dynamic counterfactuals;
• entry and expansion;
• long-term competitive effects.

The European Commission's 2026 merger-guideline review is particularly significant because it expressly seeks to incorporate dynamic effects on innovation, investment, entry, exit, future product competition and entrenchment into a modern merger framework.

Ultimately, future competition analysis does not replace traditional merger control; it expands it from a predominantly static examination of existing market structure into a forward-looking examination of how a transaction may shape the competitive structure of markets over time.