The European Union is preparing to overhaul merger rules to limit national governments' ability to block corporate takeovers, aiming to help European companies achieve the scale needed to compete with US and Chinese rivals. A European Commission discussion paper proposes clarifying when national interventions are justified, addressing concerns that such actions have unnecessarily hindered business scaling.

Growing frustration in Brussels stems from several high-profile cases where capitals intervened in significant deals. Germany opposed UniCredit's takeover of Commerzbank, Spain blocked BBVA's merger with Banco Sabadell, and Italy invoked its golden powers in Unicredit's bid for Banco BPM. EU officials worry these interventions fragment the single market and undermine efforts to build pan-European companies.

The proposed reforms come as part of a broader merger rule overhaul expected to be discussed by the Commission this week. While Brussels maintains its commitment to preventing excessive market concentration, the new guidelines aim to foster 'pro-competitive scaling-up' that enhances Europe's global competitiveness. Competition Commissioner Teresa Ribera has emphasized that merger policy alone cannot solve Europe's competitiveness challenges, highlighting the need to deepen the single market, particularly in sectors like telecoms.