European Champions: Why the Revolution Won’t Happen

Hello! Today is February 16, 2026, and here is your EU news summary for the week. Feel free to share this newsletter with friends and colleagues, and follow us on LinkedIn.

The expert of the week is Bruno Alomar. Bruno is the CEO of New Horizon Partners and a lecturer at Sciences Po. He previously served as a senior civil servant at the French Ministry of Finance and at the European Commission’s Directorate-General for Competition.

In 2025, the European Commission launched a review of its main merger control guidelines, with a draft expected in spring 2026 and likely adoption by 2027.

These guidelines define the analytical toolkit used by the Commission to authorize or prohibit mergers. The revision aims in particular to better reflect digital business models, innovation, and the competitiveness and resilience of European economies.

In the background, the debate continues over whether competition law enables—or hinders—the emergence of European champions. Yet a radical paradigm shift still seems unlikely.

Why “European Champions”?

Backing “European champions” runs counter to the ordoliberal foundations of EU competition law, embedded in the Treaty articles since 1957. Through its federal powers in competition—abuse of dominance, state aid control, and merger regulation—the EU has traditionally shown mistrust toward large corporations.

However, several forces now fuel the argument for European champions: China’s and, more recently, the United States’ open challenges to fair competition rules; the absence of major EU tech firms; limited consolidation in sectors like banking or telecoms; and, more broadly, the growing protectionism and economic warfare worldwide.

The Draghi Report (2024) cautiously aligns with this perspective. While it does not call for creating or supporting champions “at any cost,” it suggests adapting merger control rules to let European firms reach global scale in strategic sectors, without weakening competition within the single market.

A French Export

France, historically uneasy with a competition law tradition foreign to its economic policy culture, has long pushed the idea of nurturing “European champions.”

In 2005, after controversial merger cases such as the failed Enel–GDF merger and Mittal’s takeover of Arcelor, France drafted a memorandum advocating reform of EU merger control to make it more compatible with creating European champions.

In 2019, after the Commission blocked the Alstom–Siemens merger, France and Germany released a joint manifesto pursuing similar aims. They even floated the idea that the Council of the EU (i.e., Member States) could, under certain conditions, overturn Commission merger decisions.

Political Barriers to Changing the Doctrine

Despite some level of support from the Commission President, significant political barriers remain.

First, competition law is one of the EU’s core pillars and achievements, with strong political consensus to preserve it. The European champions debate—driven by France, whose economic results are mixed, whose colbertist instincts unsettle others, and which already hosts many of Europe’s largest firms—struggles to gain broad acceptance.

Second, each Member State defends its own territory. Failed consolidation attempts in banking, such as proposed UniCredit–Commerzbank tie-ups, show how national concerns over financial stability, employment, and preserving domestic “champions” often trump European ambitions.

As Enrico Letta remarked on 28 October 2025: “A strategy for European champions should begin with two European champions that are not Franco-German,” challenging the idea that every major industrial project must run through the Paris–Berlin axis.

Legal Barriers to Changing the Doctrine

Creating European champions involves two types of legal instruments.

Guidelines (“soft law”).

The ongoing review concerns the horizontal (between competitors) and vertical (along the value chain) merger guidelines. Revising guidelines is politically easier and faster than amending a regulation. It can still significantly affect the Commission’s decision-making practice.

However, guidelines lack the binding force of legislation adopted by the Council and Parliament and cannot alter the obligations laid down in the Treaties or Regulation 139/2004, under the close scrutiny of the Court of Justice (CJEU).

The Illumina/Grail case illustrated this clearly. The CJEU annulled the Commission’s approach to accepting referrals of certain mergers as set out in a Commission notice. The Court reaffirmed that the Commission’s interpretation (including in guidelines and soft law) must stay within existing legal boundaries.

As DG Competition has repeatedly emphasized, market definitions, subject to CJEU review, must align with economic reality. The 2024 revision of the Commission’s Market Definition Notice did not lead to a Copernican revolution on the treatment of non-EU competitors in EU merger control.

Regulation.

To change competition law objectives more profoundly, the EU would need to overhaul Regulation 139/2004 on mergers—a step outlined in the 2019 Franco-German memorandum.

Because that regulation was adopted by unanimity under the so-called flexibility clause (Article 352 TFEU), any substantial amendment would require unanimity.

A substantial political momentum across Member States would be needed to achieve this. Given that the regulation has remained unchanged since 2004, many countries fear reopening it would “open Pandora’s box.” This route therefore seems highly unlikely.

COMPETITIVENESS • EU leaders gathered in Belgium for an informal retreat convened by the European Council on February 12. They discussed deepening the single market, reducing economic dependencies, and boosting the continent’s lagging competitiveness. Mario Draghi and Enrico Letta briefed the leaders on how to turn their reports into concrete reforms.

The informal retreat is meant to prepare a strong response to current geoeconomic challenges and gather momentum before the upcoming 19-20 March meeting of the European Council.

In particular, EU leaders agreed to (take a deep breath) push ahead with the Commission’s simplification (or deregulation) agenda, getting the 28th regime proposal out and right in 2026, support consolidation in selected sectors such as the telecoms, find pragmatic solutions to get electricity prices down, reduce dependencies in select sectors, use European preference in a “proportionate and targeted way”, continue an open trade policy geared towards diversification, and move forward with boosting investment within the EU.

Notably, Germany’s Friedrich Merz indicated that the Commission would move ahead with the provisional agreement with Mercosur countries. He also said he did not back further joint EU borrowing, aka eurobonds. France proposed imposing “accross-the-board tariffs” to Chinese imports.

Finally, it emerged that the Commission will side with a “Made with Europe” rather than “Made in Europe” approach to European preference in its upcoming Industrial Accelerator Act (IAA), due to be unveiled on February 25.

To a large extent this is a wish list. It remains to be seen whether the political impetus will still be there in March and whether it will translate into tangible change. Ursula von der Leyen has signalled she is willing to use “enhanced cooperation” mechanisms — coalitions of 9 willing Member States — to move on with reform. France’s Emmanuel Macron said the European Council must agree on a competitiveness package by June.

HUNGARY • The Advocate General of the Court of Justice of the EU (CJEU) considers that the European Commission violated EU law when it decided, in December 2023, to unfreeze €10.2 billion in cohesion funds for Hungary.

The funds had been frozen over concerns related to the rule of law, particularly independence of the judiciary. The budgetary conditionality regulation allows the Commission to propose of the adoption of such measures by the Council in cases of rule-of-law violations.

The Commission ultimately authorized the unfreezing of the funds — on the eve of a European Council meeting in 2023 devoted notably to financial support for Ukraine, which Hungary was threatening to block — arguing that the judicial reforms adopted by Budapest met its requirements.

The timing of the unfreezing and that European Council meeting sparked widespread criticism. The European Parliament filed an action for annulment before the CJEU in March 2024.

The Advocate General recommends that the Court annul the decision to unfreeze the funds. She finds that the Commission failed to demonstrate that all the required reforms had entered into force and were being effectively implemented, and that it did not adequately justify its decision.

If the CJEU follows the Advocate General’s opinion, the Commission’s room for manoeuvre in unfreezing funds would be significantly reduced. It is unlikely, however, that the ruling would lead to funds already disbursed to Hungary being frozen again.

• In a column for Bruegel, Ignacio García Bercero and co-authors argue that a light-touch ‘Made with Europe,’ rather than a rigid ‘Made in Europe,’ should guide EU industrial policy. They advocate, for instance, resisting rigid local-content requirements in favour of case-by-case assessments and negotiated arrangements with investors.