The Dutch market regulator ACM wants more power to investigate acquisitions independently. This was after the EU’s decision not to take action against Microsoft’s takeover of Inflection.
“The question is whether the stronger position of Microsoft after the acquisition of Inflection has negative consequences for consumers and companies in the Netherlands, such as less choice or innovation,” responded ACM chairman Martijn Snoep. The regulator asked the European Commission to investigate partly because of the possible negative consequences of the acquisition. Snoep: “The ability to investigate the consequences of this type of takeover and prevent market power is now missing.”
Yesterday, the European Commission announced that it would not further investigate possible market violations surrounding the deal between Microsoft and Inflection. Earlier this year, the tech giant acquired much of the staff and licenses of AI company Inflection. Inflection’s founders joined Microsoft to develop Copilot and other AI initiatives further. This raised concerns among regulators, including European authorities. However, the EU decided not to investigate further, partly because some countries had withdrawn their requests to do so.
Call-in option
The ACM is now dissatisfied and calling for new powers. The watchdog notes that the acquisition did not need to be reported to the European Commission or the ACM because the turnover thresholds were unmet. Still, a company like Inflection represents significant value. That is why the ACM considers an investigation necessary; the watchdog is concerned that Microsoft is eliminating an innovative competitor, potentially leading to less choice for companies and less innovation in the market.
“However, acquisitions below these thresholds can also have negative consequences for consumers and businesses in the Netherlands, for example, when an already dominant company buys out a small emerging competitor or when the competition occurs at the local level or in niche markets,” the ACM said. The regulator warns that this can lead to market power, resulting in higher prices, less quality, and less innovation.
That is why the ACM is now advocating a “call-in power.” This would mean that not all small takeovers would have to be reported, but only takeovers where the watchdog suspects they could be problematic for consumers and businesses in the Netherlands. The ACM could then investigate the takeovers or refer them to the European Commission.