They want to oversee small-value acquisitions in order to protect competition.
EU antitrust regulators want to have more say over small merger deals involving start-ups in the technology, biotechnology and pharmaceutical industries. This is according to a report in Reuters that appeared last week. The enforcer is issuing a warning to big companies eyeing such deals, the article said.
The EU’s move reflects regulatory concerns both in Europe and the US that big companies are going on a buying spree to snap up small start-ups. They want to do this to avoid competition scrutiny. In the past, such low-value deals meant antitrust enforcers did pay attention. The EU wants that to change.
Preventing “killer acquisitions”
These small acquisition deals can have a malicious ulterior motive, according to industry watchdogs. Often a big company will buy a potential rival still in its start-up phase, with the aim of shutting it down before it can become a threat. That is why these deals are called “killer acquisitions.”
Alphabet’s Google and Facebook in recent years have acquired hundreds of small companies. Critics say these deals aim to crush competition, while supporters say such deals provide the money and resources to help start-ups to grow.
The European Commission said it wants national competition watchdogs to refer more small deals to the EU enforcer.
European Competition Commissioner Margrethe Vestager was clear in her statement. “A more frequent use of the existing tool of referrals under Article 22 of the Merger Regulation can help us capture concentrations which may have a significant impact on competition in the internal market,” she said.
The Commission cited recent deals in the digital, pharmaceutical, biotechnology and certain industrial sectors which had escaped regulatory scrutiny.