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Competition, often associated with consumer protection, is a vehicle for business growth and innovation since it drives balanced trade relations and the selection of efficient firms. Yet, too much competition can curb investment capacities, if not the incentive to innovate. In line with the Draghi Report, the EU is upgrading its merger controls in a move that could facilitate mergers that generate efficiency and competitiveness.

2026-02-12T00:00:00+01:00<p>Competition on a market drives down prices, improves quality and diversifies the supply of goods and services for the benefit of households and businesses. In addition to these effects on each product or market, healthy competition is key for economic growth (e.g. through business creation, see Chart). A lack of competition in the upstream value chain can increase the cost of intermediate goods for downstream businesses. Moreover, competition drives selection of the most efficient businesses and encourages them to stand out by investing and innovating.&nbsp;</p> <p>Nevertheless, too much competitive pressure can sometimes harm businesses. By reducing markups, it can limit their ability to finance investment and curb the incentive to innovate when the future return on an innovation is lower. In some sectors, such as tech and manufacturing, moderate concentration can generate economies of scale through lower production costs from increased production volumes, support R&amp;D and increase competitiveness.</p> <p>Competition policy is currently being upgraded and is widely seen as necessary by stakeholders. The review of the EU merger guidelines launched by the European Commission aims to give more weight to innovation, sustainability and resilience criteria in merger cost-benefit analysis. By better accounting for efficiency gains associated with consolidation, some mergers that increase competitiveness and innovation could be more easily approved.</p> <p>&nbsp;</p> <p style="text-align: center;"><img class="marge" src="/Articles/7ceccf6c-77a5-4d7d-b40f-732f1de5260d/images/9b41a8d7-f0ce-4361-a3e1-837135855686" alt="Visuel TE 381en" /></p>