France, Germany, the Netherlands want more control over mergers

The logos of Google, Apple, Facebook, Amazon and Microsoft are displayed on a mobile phone with an EU flag in the background.

Justin Tallis | AFP via Getty Images

LONDON – The European Union needs to be more ambitious in controlling big tech and smaller acquisitions, which are often scrutinized, Germany, France and the Netherlands said on Wednesday.

The 27-member bloc is currently discussing new laws that could ultimately force Big Tech to change how it works. The law on digital markets presented last December is intended to create a level playing field in the EU market and could be implemented as early as 2022. In this context, Berlin, Paris and The Hague are calling for a stricter stance on mergers.

“We need to strengthen and accelerate merger control, particularly with regard to certain gatekeeper platforms, in order to address the strategies of platform companies, which consist of systematically buying up emerging companies in order to suppress competition,” said a joint statement from the three countries.

It has long been a problem for European capitals that some of the world’s largest tech companies, including the EU, have been buying up startups in deals that have escaped scrutiny because they haven’t reached a certain turnover threshold.

Whereas high profile purchases like Microsoft’s acquisition of Skype in 2011 hit the headlines; smaller deals often go unnoticed. For example, in 2019 Apple bought an artificial intelligence company in the UK (no longer an EU nation) for an undisclosed sum.

Margrethe Vestager, the EU’s competition director, spoke to CNBC in 2019 about how a “shopping spree” had come about in Europe.

In their joint statement on Wednesday, France, Germany and the Netherlands said the EU should “set clear and legally defined thresholds for acquisitions of targets with relatively low sales but high value by gatekeepers”.

In addition, the same nations have asked the EU “to adapt the content test to effectively address cases of potentially predatory acquisitions”.

The 27 EU member states are currently discussing the European Commission’s proposal for the Digital Markets Act together with the European legislature. Stephanie Yon-Courtin, European legislator, spoke to CNBC on Tuesday at the ReThink Digital Summit that “something should be ready” by the end of the first half of 2022.

The EU is already a leading regulator in technology, but the bloc believes its rulebook needs to be updated to better cope with the growing power of some of the world’s largest tech companies.

Tommaso Valletti, professor of economics at Imperial College Business School, said the EU was ill-prepared to deal with the many mergers that have taken place over the years.

“We’re still a little behind on mergers,” he told CNBC at the same conference, adding that Google, Amazon, Facebook, Microsoft and Apple have acquired a thousand companies over the past 20 years and none of these deals have been banned.

“This was a global problem,” he said.

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