GSMA report suggests new framework for European mergers

• GSMA claims current M&A guidelines focus on short-term impact
• The current system can deter investment and innovation
• New framework calls for regulators to consider negatives and positives of mergers holistically

The GSMA has published a new study outlining how the EU’s current merger guidelines focus too much on short-term effects to the detriment of investment, innovation and capability building.

The Dynamic Framework for the Assessment of Horizontal Mergers report, commissioned by the GSMA and Connect Europe, offers a conceptual framework to support the European Commission’s review of its merger guidelines, launched in May 2025.

The report, which was prepared by consulting firm BRG on behalf of the GSMA, highlights several flaws in Europe’s current Horizontal Merger Guidelines. It says current rules include a highly risk-averse approach that does not consider the longer-term effects of mergers.

It also accuses regulators of operating on the core assumption that mergers are more likely to harm competition than enhance it, while claiming the current analysis of mergers is flawed because “efficiencies are treated as offsets to an already-formed theory of harm”.

Of course, the GSMA and the telco it represents have a long history of criticising the European approach to consolidation, with concerns raised following the EU’s blocking of a number of telco mergers over the last decade, such as the proposed acquisition of O2 UK by Three-owner Hutchison in 2016.

The report offers an alternative, three-step approach that the writers claim would act as a framework for evaluating adverse and positive effects of proposed mergers together.

The first step is the identification of relevant dimensions of competition that drive consumer welfare in any given industry. Then, the development of a theory of competitive effects for each dimension. The third and final step would be to integrate efficiencies into the core competitive assessment.

Vivek Badrinath, director general at the GSMA, commented: “Optimising consumer welfare is the most important goal of merger analysis.

“The current approach to merger assessments does not give proper weight to dynamic elements, which can result in merger assessment outcomes that have a longer-term detrimental impact on innovation, growth, investment and ultimately consumer welfare.

“As the commission advances its review of the merger guidelines, it is imperative that a modernised and broader-based consumer welfare approach to empower Europe’s industries, and which allows them to scale up in global markets, is embedded in the core merger assessment analysis,” he added.

Mergers in telecoms can help improve investment incentives and accelerate network upgrades, the report claims, which means both short-term prices and long-run quality effects should be assessed by regulators.

The 136-page report follows the closure of the second public consultation carried out in 2025 to evaluate how the commission should assess mergers within the existing framework. The second, more in-depth consultation closed in September.

This is all while consolidation has been back on the telecom agenda, with those in the UK (Virgin Media and O2, Three and Vodafone), MasOrange in Spain, and Altice in France, all either recently completed or in the works.

- James Pearce, Contributing Editor, TelecomTV