The Economics of Efficiencies in Merger Assessments
Competition Law Journal, 2026
Efficiencies are formally recognized in both the UK and EU merger regimes, yet they have so far had limited influence on clearance decisions. This limited role reflects both the difficulty of assessing efficiencies and the stringent conditions under which authorities may take them into account. At the same time, competition authorities face growing pressure to “modernize” merger control so that it supports a wider set of policy objectives, including competitiveness, sustainability, and security. This has prompted renewed debate about the role that efficiencies can and should play in merger assessment.
In an article published in Competition Law Journal, Analysis Group Manager Lucien Frys considers whether and how economic tools can be used to account for efficiencies in merger assessments. Drawing on economic literature and on merger cases from a range of jurisdictions, Dr. Frys focuses on three categories of efficiencies that are frequently raised but rarely satisfy the stringent conditions imposed by authorities: economies of scale, innovation efficiencies, and out-of-market efficiencies. For each, he discusses the conditions under which efficiencies are likely to arise, how they can be measured, and how they have been treated in practice.
Dr. Frys concludes that the central difficulty lies not in the absence of economic tools, as many of the techniques needed to identify and quantify efficiencies already exist, but in the institutional and legal framework of merger control. That framework credits efficiencies only when they are merger specific and benefit in-market customers within a sufficiently clear time frame. He argues that if efficiencies are to play a meaningful role, authorities will need an explicit policy mandate to take account of quantified out-of-market and long-term efficiencies, a framework for weighing benefits and costs across different groups of consumers, and methodological guidance clarifying that efficiencies should be considered even where they only partially offset competitive harm.