A few Brussels lobbyists I spoke to have recently developed a surprising fascination with white powder. Not the sort that generates late-night parliamentary inquiries or police press conferences. Something much more dangerous.

Industrial pigment.

Titanium dioxide - the substance that makes paint brilliantly white and toothpaste adverts glow with unnatural dental perfection - has quietly become a small part of the debate about European economic security.

The last time this substance was on the minds of bubble dwellers was when the EU banned it as a food additive, causing much wringing of hands in the AmCham Environment Committee, where I sat at the time. It was later classified as a carcinogen when inhaled under chemicals law, a designation which the Courts recently overturned.

This time, the European Union finds itself confronting a strategic question: who controls Europe’s supply of industrial-grade white powder?

When Brussels (re)discovered white powder

Titanium dioxide, often called “titanium white”, is one of those chemicals that nobody notices but everyone depends on. Although now banned in food it appears in paint, plastics, cosmetics, medicines, paper coatings and (oddly enough) sunscreen. If something looks very very white, titanium dioxide is probably involved.

And like many seemingly boring industrial inputs, its production is dominated by a small number of large companies.

One of those companies is LB Group, the world’s largest producer of titanium dioxide. The firm now proposes to acquire Venator Materials’ chloride-process titanium dioxide assets, including a major facility in the United Kingdom - which European Coatings magazine called the ‘jewel in the crown’ of Venator’s operations - and associated intellectual property.

The transfer IP to China is of particular concern, as insiders say it would open up a more discerning client base for LB - the kind looking for high-grade white stuff that looks so perfect you could ski on it. LB is a Chinese company based in Henan province and listed on the Shenzhen stock exchange. If the Chinese could produce the good stuff, its factories would almost certainly churn it out for less than their European counterparts.

Chinese industrial planning strategies have long directed investment into titanium dioxide production, encouraging capacity expansion and technological upgrading. In particular, Chinese policy has supported the development of chloride-process production, the advanced technology used to produce the highest-grade titanium dioxide pigments. They just don’t seem to have perfected it yet.

There is also evidence of direct state support. LB Group’s own public disclosures record substantial government grants: roughly $37 million between 2017 and 2019 and more than $50 million between 2021 and 2023. Which is precisely the sort of information that tends to make competition lawyers sit up, adjust their glasses and begin flipping through the Foreign Subsidies Regulation while quietly muttering the phrase “foreign financial contributions”.

The anti-dumping-circumvention-waltz

There’s another reason LB’s European competitors are getting nervous about the UK acquisition.

If white powder is sent directly from China to the EU, a €0.74/kg anti-dumping duty is charged. But if the same powder is sent from China to a third country - say the UK or Albania for example - and processed again before it ends up in the internal market, then the anti-dumping duty magically goes away. Titanium Dioxide duties are set at zero under the EU’s common external tariff.

Venator also has production facilities in Germany and Italy which would have given LB similar production capacity and access to IP. But it wasn’t interested in those, and cynics are saying that’s because it intends to send its powder to the UK, undertake as little processing there as possible, and then get it into the internal market as a British white powder, neatly circumventing the anti-dumping duties.

The same logic would not work with Venator’s assets in Germany or Italy. Any Chinese titanium dioxide shipped directly to those plants would cross the EU border first. At that moment the anti-dumping duty would already apply. Processing it afterward would not make the duty disappear, no matter how enthusiastically one stepped on or cut the industrial white powder.

A concentrated market gets…whiter

The titanium dioxide market is already fairly concentrated, so when the largest producer proposes to acquire another major supplier’s assets, competition authorities generally begin to pay attention. The UK’s Competition and Markets Authority already has, kicking off a phase one investigation.

So far, however, the European Commission has largely turned its nose up at the case. This is slightly surprising: partly because the transaction appears tailor-made for the Foreign Subsidies Regulation. The value of the deal doesn’t quite require it to be notified, but that’s what call-in powers are for. And yes, the assets are on Brexit Island, but that doesn’t stop it affecting the internal market, as the Commission’s decision to take the acquisition of a Brazilian mine to Phase 2 shows.

Indeed, the Polish regulator is also currently holding up the deal, which was notified there back in November. Poland is home to Grupa Azoty, a rival maker of the white stuff.

So what’s holding the Madou Tower back?

One theory going around is that it’s all bound up in the psychodrama of appointing a new Director General.

The current stand-in, Linsey McCallum, isn’t in the frame for the job and is therefore not all that keen in making a bigger splash than she needs to, according to this theory. The identity of her successor is the victim of the ever-deteriorating relationship between Competition Commissioner Teresa Ribera and Commission President Ursula von der Leyen. So difficult decisions on whether to use a new toy for the first time are being put on hold.

Maybe, although that argument is somewhat undercut by the ferocity with which the FSR team raided the EU headquarters of Chinese ultra-discounter Temu towards the end of last year. Maybe they don’t see this sitution as that big of a deal and are happy to let any anti-dumping investigations play out first.

The problem with that is, any resolution might come too late to save our white powder from being eclipsed by cheap Chinese imports. Anti-circumvention rules are cumbersome to enforce, with investigations taking at least a year. The European sector argues that it simply doesn’t have the luxury of that much time.

The European Union has spent the past several years emphasising the importance of de-risking supply chains and reducing strategic dependencies. Titanium sits inside a number of industrial value chains relevant to aerospace, defence and advanced manufacturing. Strategic industries are not always glamorous; sometimes they involve semiconductors, rockets or artificial intelligence. And sometimes they involve the chemical compound that makes paint white.

Or perhaps white powder just isn’t cool enough for forty-something Commission officials to be involved with any more.

Competition decisions are not generally written with the reader’s entertainment in mind. They tend to resemble the bastard love child of a tax return and the instruction manual for assembling Chinese-made flat pack furniture.

But the European Commission’s decision on ADNOC’s acquisition of Covestro is one of the first serious tests of the Foreign Subsidies Regulation (FSR). If one squints slightly, it tells us quite a lot about how future cases may play out. Possibly including a certain transaction involving Electronic Arts. So, I reasoned, I’d probably have to read it.

To understand the story, one must remember how the FSR investigation unfolds. The Commission essentially works through a sequence of questions:

1. Was there a foreign financial contribution (FFC)?

2. Did it confer an advantage?

3. Did that advantage distort the acquisition process?

4. Could it distort competition after the deal?

5. Can remedies neutralise the distortion?

Simple enough in theory.

In practice, however, FSR is a legal framework applied to fundamentally political questions. Traditional merger control is supposed to be technocratic. FSR is the EU politely applying rules-based makeup to what is, at heart, a geopolitical pig.

And on top of that, there’s one procedural point worth remembering: there is no such thing as Phase I remedies. If you need commitments, you are going to Phase II. Bring snacks.

Chapter One: was this a foreign financial contribution?

One method I’ve found to make reading decisions more enjoyable is to have your chatbot of choice reproduce them in the style of a famous author. Let us begin in the style of Jane Austen, where polite scepticism is always delivered with perfect manners.

“ADNOC, wishing to preserve its reputation as a commercially minded enterprise, argued that its operations were conducted independently, according to ordinary business judgement. Though owned by the Emirate, it suggested that its financial decisions were not dictated by government instruction.

The Commission regarded this explanation with respectful but evident scepticism. Ownership, after all, has a habit of revealing influence.”

The Commission’s reasoning is not complicated. ADNOC is wholly owned by the Emirate of Abu Dhabi, and its governance structure remains closely tied to public authorities responsible for strategic national enterprises.

ADNOC argues that there’s sufficient distance between it and the BidCo, XRG, to make any unlimited guarantee a moot point: but the Commission were having none of it. They almost whimsically reproduce ADNOC’s board members in full, dryly pointing out that most of its members hold ministerial positions.

The same structural reality applies to other sovereign investment vehicles. Saudi Arabia’s Public Investment Fund, for example, looks remarkably similar when one examines the board.

Clever corporate structuring does not hide sovereign ownership. If the state owns the company, the Commission will treat the money as state-backed.

Chapter Two: Did the advantage distort the acquisition process?

At this point, the temptation to overuse literary assistance becomes irresistible. So imagine the Commission’s analysis delivered as a Shakespearean soliloquy:

“Did foreign gold incline the courting field?

The offer — two-and-sixty coins a share —

By some accounts stands higher than the norm.

Yet comes the answer swift: the price is fair,

The market’s arts and reckonings approve it.

And more: no rival suitor rose to bid.

But here the matter turns more subtle still.

For silence proves not innocence in trade.

A bidder flush with sovereign favour

May chill the courage of competing men.

What merchant enters lists already lost?”

The Commission concluded that the offer price was on the high side. But it also explored a more interesting possibility: the chilling effect. If a bidder is backed by effectively unlimited sovereign resources, rival bidders may simply decide not to bother. Why start a bidding war you can’t win?

This is where the Covestro case becomes interesting for future deals. ADNOC offered roughly a 50% premium to the market value of the unaffected share price before news of the negotiations broke. In the EA transaction, the figure circulating is closer to 25%.

Chapter Three: What happens after the acquisition?

Now let us switch tone and imagine the Commission’s internal debate written by P.G. Wodehouse.

One of the Commission’s more thoughtful officials — a chap who had spent many years contemplating the curious habits of international capital — eventually leaned back in his chair and observed that perhaps they had been looking at the matter from the wrong end.

The more pressing question, he said, was what would happen after the acquisition.

The documents before the Commission indicated that the merged company intended to pursue a rather energetic programme of investment. New facilities. Expanded production. Money directed toward promising technologies — particularly those involving sustainable materials.

All of which was perfectly admirable. The Commission has always been fond of companies investing in useful things.

But the official gently pointed out — in the careful manner of a man replacing a teacup exactly on its saucer — that if those investments were funded by advantages derived from a foreign state, the resulting company might develop a certain spring in its step that competitors would find difficult to match.

The Commission is effectively worrying about over-investment in a European industrial champion to the detriment of its competitors. Which makes sense when the company in question produces materials that align neatly with EU industrial and climate policy. Whether that logic translates neatly to an American publisher of video games is, of course, another matter entirely.

Chapter Four: remedies, or how to pretend everything is fine

For this final act we turn to Douglas Adams.

“At a certain point in regulatory investigations — and this happens with remarkable consistency across the European Union — the discussion stops being about what went wrong and starts being about how everyone might pretend, in a perfectly respectable and legally robust way, that nothing too terrible will happen in the future.”

Two remedies were central.

First, the Commission addressed the possibility that ADNOC could benefit from an implicit unlimited state guarantee. The fix they employed the last time ADNOC bought an important European telecoms business involved ensuring that normal bankruptcy rules would apply, thereby removing the perception that losses would ultimately be socialised by the Emirate. In the end, this is a copy/paste job.

But second came a more interesting condition involving Covestro’s intellectual property. Covestro has an impressive portfolio of patents in sustainable materials and lower-carbon industrial processes. With ADNOC’s financial backing, there was every reason to believe the company might become even better at inventing things.

Which is excellent news for science, but possibly less excellent news for competitors if those inventions were locked behind a door.

The Commission therefore proposed a compromise. Certain technologies would be licensed to third parties on fair, reasonable and market-based terms. Lists of patents would be published, and dispute mechanisms created.

This is designed to deal with the possibility that the unlimited guarantee perpetuates an ongoing market distortion

, and keeps what the Commission saw as critical technological know-how in the control of European-owned companies.

Time will tell whether this is at all effective. But what it does show is that FSR lets case handlers in the Madou Tower get creative with structural remedies. Perhaps EA will need to get comfortable with that concept too.

The Political Interlude

And now we arrive at the slightly awkward part of the story. At one point during the investigation — after repeated requests for information in both Phase I and Phase II — ADNOC appears to have lost patience.

“We are deeply disappointed by today’s decision” ADNOC’s spokesperson said, upon learning that the case would be moved into phase two.

“The Commission’s demands have strayed far beyond what is reasonable or relevant to this transaction, crossing into areas that are both disproportionate and invasive. While we remain committed to pursuing a constructive path forward, the continuation of such an approach raises serious questions about the viability of this investment”.

This seems to be a pretty straightforward “do you want our money or not?” statement. And, as it turns out, they did.

In the decision itself, one can almost see the moment when this occurred. The tone of the recitals shifts noticeably, and agreement on remedies suddenly becomes remarkably smooth.

The explanation is widely understood in Brussels. The case moved above the level of DG COMP. Senior political conversations followed: a call between Teresa Ribera and Sultan Al Jaber (ADNOC’s CEO), a meeting between Ursula von der Leyen and Al Jaber on the sidelines of the UN General Assembly in New York, and discussions with the German government. And then suddenly all was well.

Which brings us back to the broader point. The FSR is not traditional merger control: it’s a political process dressed in legal language. Lipstick. Pig. You get the idea.

And that matters if — hypothetically — a future case involved Saudi capital, American assets, a left wing Spanish Commissioner and the occasional appearance of figures like Jared Kushner. If such a deal ever reached Phase II, one suspects the literary inspiration might move away from Jane Austen entirely.

Something closer to Game of Thrones might be more appropriate.

Like many bubble-dwellers, on Friday I awoke to an email from someone called Brian Morris.

“I wanted to write to you personally,” the very obviously not-personal email began. “I have signed an agreement with David Lloyd Clubs that will result in a change of ownership.”

Morris is the British property magnate behind Aspria, a chain of three luxury, family-friendly gym and spa complexes in Brussels much frequented by EU policy rats. My family and I are members, along with half of DG Competition. I suspect the other half are members of David Lloyd, which operates the other two luxury, family-friendly gym and spa complexes in Brussels.

That’s the problem: in the market for luxury, family-friendly gym and spa complexes in Brussels, this deal is a two-to-one. David Lloyd certainly seems to think Aspria is its competition, which is presumably why it has bought up all the bus-stop advertising boards around Aspria’s flagship site.

And if there’s one city where customers of luxury, family-friendly gym and spa complexes are likely to take offence at such a brazen two-to-one, it’s Brussels.

Defining the market

The reason I keep repeating the phrase “luxury, family-friendly gym and spa complexes in Brussels” is because that’s what the case law and practice suggest the market definition might be. Or, more specifically, the bits of Brussels Eurocrats tend to live in.

Back in 2003, Virgin Active — a UK gym chain — bought its rival Holmes Place. In a decision signed off by Mario Monti himself, the Commission decreed that no matter how narrow the market definition, the concentration didn’t pose a problem. But it did the work of figuring out how they might define it if they needed to, and repeated the logic a decade later in a similar Swedish case.

What those decisions show is just how narrow a market definition can go in this sector. There are essentially four dimensions: public vs private ownership, geography, cost, and facilities.

Both Aspria and David Lloyd’s clubs are privately owned, operate on a membership model, and are hideously expensive. If I just wanted a gym membership, I’d pay Basic Fit €35 a month and use the one round the corner. I’m almost embarrassed to admit that my wife and I pay over €230 a month each (plus VAT) for access to two of Aspria’s three Brussels sites.

There are two reasons I allow myself to be subjected to such brazen daylight robbery.

First, we like our gyms fully equipped with pretentious accessories like yoga classes, pools, saunas and steam rooms. And second, we have a delightful toddler who needs looking after while we use those facilities and who, as she grows up, will require her own pretentious luxuries like summer camps, swimming lessons and possibly tennis classes.

My wife is a recovering competition lawyer who now works at the Commission regulating banks. I’m a career lobbyist who has only recently discovered the joys of the EU’s competition bubble. We’re Brussels lifers with small kids slowly coming to terms with the fact that we don’t fit in at Place Lux on a Thursday any more.

Many people in the EU bubble are part of the same demographic. When we look for gyms, we want what we want and are prepared to overpay for it.

I am neither young nor pretty enough to join Animo, the Instagram-friendly fitness start-up near the Berlaymont. But even if I were, they don’t have a pool, kids’ facilities or tennis. World Class has a pool but no spa or kids’ classes. Jim’s is out for the same reason as Basic Fit: it’s a budget option without the requisite creature comforts. Mix doesn’t have tennis courts and is essentially a destination hotel, and Waer Waters is the same but with a nudist spa tacked on for good measure: not somewhere you take your 18-month-old.

So what do pampered Eurocrat families do? We shell out for membership at one of the three clubs to the east of the city (let’s be honest, none of us live in Molenbeek) that tick all the boxes: David Lloyd Uccle, David Lloyd Sterrebeek or Aspria Royal La Rasante.

Closer to home?

In a few months there will be another Aspria in Bois de la Cambre. That means both David Lloyd sites will be within a 15-minute drive of an Aspria site: Sterrebeek from La Rasante and Uccle from Bois de la Cambre.

That’s not good news for the deal. In 2024 the Spanish enforcer, the CNMC, approved Basic Fit’s takeover of the operator of the Holmes Place franchise in Spain. It cited the 2003 Commission decision and concluded that, in the outskirts of a city, a gym’s catchment area was be defined as a 15-minute drive. It didn’t matter in Madrid because the market was highly fragmented and Basic Fit wasn’t active in the premium segment. Brussels is essentially a duopoly.

David Lloyd could argue that the 15-minute walking catchment used for city centres should apply here (which would remove Aspria’s sites from the analysis), but that’s somewhat undermined by the massive car parks at all four sites. Making it a little bigger doesn’t help much either: you add Mix and maybe World Class at a stretch, but those cater to people without rugrats to entertain.

I suppose they could argue that the 15 minutes includes Brussels traffic, which inevitably takes the timing above the threshold.

But does it really matter?

My wife is from Madrid and I’m from London. Real estate and living costs are higher in both cities than in Brussels. So to get a sense of whether we’re getting ripped off, we looked at David Lloyd pricing in our home cities that we found online (imperfect, admittedly). A monthly family membership in comparable out-of-town locations in either Madrid or London is about 10–20% less than what we currently pay for Aspria. (No, I’m not factoring in the Mayfair one). Aspria doesn’t have sites in either location.

(High-end gyms don’t publish their prices, so I relied on the best research my premium ChatGPT subscription could muster. Don’t @ me.)

We’re told by our pampered friends at David Lloyd that their Brussels pricing is even more outrageous than at Aspria. If the duopoly is already ripping us off, it’s hard to imagine prices becoming more reasonable after a merger. Luxury gyms have high gross margins, low marginal costs per additional member and a fixed-cost structure. Even a small reduction in competitive constraint might sustain meaningful price increases.

A new player in town?

But surely that would tempt entry? Maybe. But it took me a year to get permission from Brussels 1000 to regularise a loft conversion in a small apartment. I doubt it gets easier when you’re building a spa complex.

And even when you get permission, good luck finding half-decent builders who turn up on time. Take a look at Schuman roundabout to see how major construction projects tend to go here. It would take at least five years for a competitor to open its doors.

But what can we do?

Fortunately for the parties, the deal almost certainly doesn’t meet the thresholds for notification under the EU Merger Regulation. That must be a relief, because any case handler would almost certainly be an overpaying member of one of these gyms, just as I am. We’ll never know whether that membership would constitute a conflict of interest under DG COMP’s rules.

Nope. This one will go to national enforcers which, for the Belgian part of the deal (Aspria also has German and Italian businesses), means the Belgian Competition Authority. National enforcers are particularly alert to deals in small geographic markets, and I dare say there are one or two health-club users over there too.

And perhaps there is a way the Commission could intervene after all. Both David Lloyd and Aspria offer special rates for Commission staff. I have no data, but I’d wager 15–20% of members are EU institutional folk.

The institutions might reasonably worry that, absent competition, the merged entity would decide it no longer needs to offer pampered Eurocrats a small discount on their outrageously expensive gym memberships. If so, the Commission would be perfectly entitled, as a customer, to lodge a complaint.

Back in February, mining giant Anglo-American announced that it was selling its Brazilian ferronickel business for half a billion dollars. But the buyer - the Chinese-Australian miner MMG - raised a few eyebrows in Brussels.

Global strategic competition, especially with China, has made access to minerals and alloys a policy priority for the EU. Ferronickel is a critical input for the manufacture of stainless steel, which in turn is used in defence platforms like airframes, naval vessels and weapon systems; as well as critical infrastructure, chemical plants and energy systems.

The fear is that MMG could divert sales away from EU customers if things get hairy, prioritising countries that might be hostile to Europe. Even assurances that MMG would enter into binding, decades-long supply agreements with EU companies wasn’t enough to calm the Berlaymont.

The deal now hangs by a thread in what’s known as phase two of the EU’s merger control process (for the uninitiated, if you need more than one phase to pass merger control, you have a problem). And without Brussels’ blessing, the sale can’t happen.

What changed?

People I speak to say that this deal would have sailed through in phase one before Vladimir Putin decided that a full scale invasion of Ukraine was a good way to spend his declining years.

Back when we thought globalisation was an unstoppable civilising force, merger control focused primarily on whether a deal would significantly impede competition in Europe in terms of price, output, choice and innovation in overlapping or vertically linked markets.

In basic industrial inputs like steelmaking alloys and metals, concerns would often center on price effects, consolidation and potential unilateral or coordinated effects. Strategic supply security was not a central enforcement driver on its own.

Plus ça change. Commissioner Teresa Ribera, whose portfolio has competition at its heart, made clear in her statement that this was all about resilience.

“Ferronickel is a key input for European producers to manufacture high-quality, low-emission stainless steel at competitive prices, which is critical for many sectors” she said in her press release. “Our investigation aims to verify whether this concentration could jeopardise continued and reliable access in Europe”.

So just like that, the goalposts moved.

Sometime in Spring, the Commission is expected to update its merger control guidelines because “transformational changes” have altered competitive dynamics. Officials are walking a tightrope. For years they have been taught that competition enforcement should be pure of heart and focus on economics.

The geopolitics are also tricky. On the one hand, the Commission talks about the need to consider resilience when looking at mergers, foreign investments and the like; on the other, they refuse to single out which jurisdictions threaten Europe’s resilience. That was awkward when it was just China. Add the US into the mix and it becomes almost unbearable.

Practically, this pulls merger control - kicking and screaming - closer to industrial policy. In a rearmament context, that matters because defence markets and supply chains (think electronics, propulsion, space, cyber, sensors, secure communications) often have narrow supplier bases, long qualification cycles, state-shaped demand and strategic vulnerabilities that do not show up neatly in consumer price effects.

And merger control is just one tool

DG COMP is often thought of as where Brussels’ real power lies, and in recent years it’s developed a new toy to play with that will become more and more relevant to defence planners.

The Foreign Subsidy Regulation is the EU’s answer to a structural gap: EU state aid rules discipline Member States, but not foreign governments subsidising companies competing in the internal market. So if you’re a state backed Chinese company and you want to access EU public procurement markets, or a Middle Eastern sovereign wealth fund looking to buy up German chemicals businesses, the idea is that FSR will stop you using your chequebook to muscle out European competitors.

Both of these examples have actually happened: China’s state railway company is being investigated for its role in the construction of a railway line in Lisbon, and Abu Dhabi’s sovereign wealth fund had to guarantee it would let other EU companies use Covestro’s IP in order to get that deal approved.

The quid-pro-quo logic is even more explicit. If your State money distorts the internal market, but you can convince the Commission that there are wider policy benefits to letting you do so, they can let the deal go through anyway. This is known as the “balancing test”. And the Regulation itself requires the Commission to focus on strategic and sensitive industries.

The relevance to resilience planning is straightforward and obvious. Resilience depends on procurement and industrial scaling, industrial scaling depends on capital, capital can be state-backed, and state-backed capital can buy market position quickly. The FSR lets Brussels say: “We want investment, but not investment that distorts competition through subsidy strategies that create dependency or hollow out domestic capability.”

But what about old fashioned FDI screening?

If merger control and the FSR are about market structure and distortions, FDI screening is explicitly about security and public order. But policy reality is that the same transactions can raise all three concerns simultaneously.

In December, the Council reached an agreement with the European Parliament to improve FDI screening, as part of initiatives announced in the Commission’s 2024 economic security package. The 2019 Regulation it replaced was deliberately modest. It created an information-sharing mechanism, non-binding Commission opinions and near-total deference to Member States.

While the new agreement stops short of mandating screening for all investments, it establishes a de facto obligation to screen transactions in a defined list of sensitive areas (defence, dual-use, critical infrastructure, advanced technologies, critical inputs), as well as supply-chain chokepoints: components, materials, software, and enabling services.

New objectives, but well-tested tools

Europe’s rearmament push has mostly been discussed in the language of budgets, production lines, joint procurement and “security of supply”. But the EU’s resilience planning is also being built through the regulatory architecture the Commission knows best. Resilience planning is not only about spending more. It is about controlling vulnerability: ownership, subsidies, dependencies, and bottlenecks. Merger control, the FSR and FDI screening are becoming the EU’s administrative toolkit for that control.

The convergence between competition and defence priorities matters because it changes what counts as “risk” in transactions. The question is no longer just whether a deal raises prices or reduces output. It is increasingly whether it shifts control over critical capabilities, supply chains, data or industrial capacity in ways that make Europe dependent on actors whose interests are not, or might not be, aligned with Europe’s.

No one in Brussels is certain when Mario Draghi was determined to be the second coming of the almighty. But since his report on regaining European competitiveness dropped, a fun new drinking game has swept the conference scene: you take a drink every time the Italian maestro’s name is evoked by a lobbyist arguing for their concerns to be front and centre, and you see if you can make it to lunch.

And when it comes to TelCos, The Book of Draghi is clear in its commandment: “thou shalt consolidate thy telecommunications sector”.

Europe cannot build the networks, data-layer infrastructure or cloud-integrated connectivity – much less the data centre capacity – needed for the next technological cycle if it continues to force four and five-player mobile markets in every Member State. In Draghi’s view, the EU’s ex-ante regulatory model has produced investment paralysis. The cure is scale. Fewer, stronger operators. Consolidation.

2026 may be the year Europe finally tests that hypothesis. Not in position papers or on conference stages, but in actual transactions.

The spark came from France. In October 2025, three rivals — Orange, Bouygues Telecom and Iliad (Free) — tabled a coordinated €17 billion non-binding offer to carve up SFR, the Altice-owned operator that has long served as France’s fourth national mobile player. The structure is as audacious as it is simple: split SFR’s consumers, fibre customers, mobile subs and B2B units among the three existing operators, with Bouygues taking roughly 43%, Iliad around 30% and Orange the remainder.

Altice rejected the bid instantly, but that is beside the point. The mere existence of a three-way carve-up proposal shows how far the industry is now willing to push. Telco CEOs have been broadcasting the Draghi message for years; the difference in late-2025 is that policymakers finally started repeating it back.

Telefónica chair Marc Murtra warned that without consolidation, Europe will fall still further behind the U.S. and China on network quality and digital competitiveness. Orange’s Christel Heydemann has been equally explicit: the continent cannot fund fibre-to-the-home and 5G-to-6G rollouts with operators starved of margin and scale. Vodafone, Deutsche Telekom and Nokia executives have echoed the same line in industry forums: Europe built a regulatory framework for the copper age and never updated it for a world in which telcos must act like infrastructure investors rather than regulated utilities.

Draghi and Enrico Letta have given this investment-thesis a political vocabulary — “competitiveness”, “scale”, “sovereignty”, “European champions” — and the Commission has begun to fold those concepts into the broader industrial-policy push around AI, cloud, quantum and semiconductors. Telecoms have been recast as strategic infrastructure, not consumer markets.

But that doesn’t change the basic merger control problem: a four-to-three mobile consolidation is still a four-to-three consolidation. And under EU law, that is one of the hardest transactions to clear.

The SFR test case

Altice France remains heavily levered, even after its partial restructuring. Any credible movement toward a binding deal re-rates its debt sharply. So if it does eventually come to pass (and this saga almost certainly isn’t over yet), the SFR approval will be the defining test of how much attitude in Brussels has actually shifted.

DG COMP has spent a decade treating 4 to 3 mobile mergers as near-automatic Phase II candidates. Market power concerns, loss of infrastructure competition, and the structural importance of having multiple network operators have formed the core reasoning across all recent files.

The French bid is messier still. A three-way carve-up is not a workaround. Economically, it is the elimination of an entire network operator and the redistribution of its assets to the remaining three. The Commission will analyse it exactly as a traditional 4 to 3, regardless of how clever the engineering might look. Expect immediate questions on spectrum concentration, MVNO access, wholesale pricing, fibre–mobile bundling, and the long-term impact on investment incentives.

The political backdrop may nudge direction, but it won’t rewrite jurisprudence. Phase I clearance is almost impossible. Structural remedies are inevitable. And if Brussels insists on a “fourth operator solution”, the entire deal structure falls apart.

Could 2026 be the turning point?

Three forces make the 2026 consolidation window unusually live.

First, debt pressure. Altice is not the only operator sitting on legacy leverage. Across Europe, sub-scale fixed and mobile operators face rising refinancing costs, stagnating revenue and capex demands that cannot be deferred. M&A becomes the only path to balance-sheet repair.

Second, political cover. Draghi and Letta have legitimised market restructuring. CEOs no longer sound like self-interested lobbyists; they sound like they are reading aloud from EU strategy documents. Policymakers now routinely use the word “scale” in public, something unthinkable five years ago. The only question is, who’s going to break cover first?

Third, the technology cycle. 6G trials, edge–cloud integration, AI-assisted network orchestration and fibre densification all require capital far beyond what the current market structure can sustain. Even regulators who dislike consolidation recognise that under-invested networks are far worse.

France is the headline, but not the only front.

Italy remains the most volatile market in Europe. TIM’s separation of NetCo and ServiceCo is still incomplete, government intervention remains unusually active, and Vodafone Italy sits in a structurally awkward position. A merger between Vodafone Italy and Iliad Italia (revived under the right pricing) or consolidation involving Fastweb cannot be ruled out.

Spain is equally unsettled. Telefónica has embraced the Draghi thesis publicly. A tie-up with Vodafone Spain, MasMovil or a partial asset deal remains plausible, though national-security sensitivities around Spanish telecom infrastructure make foreign bidders think twice.

Germany is the long shot but not completely dormant. A future recombination involving O2/Telefónica Deutschland and a cable-broadband player (e.g., Vodafone’s German broadband business) is the kind of file Draghi would consider “rational”, even if DG COMP would treat it as a multi-market integration puzzle.

CEE markets — Poland, Czech Republic, Hungary — remain fertile ground. Regional roll-ups by PPF or Liberty Global could become the arbitrageurs’ quiet bread-and-butter deals: smaller, less politically visible, and often easier to approve.

Draghi thinks Europe must scale up or accept permanent digital inferiority. CEOs think the same. But DG COMP is not in the business of rewriting its own rulebook because the macro-narrative feels urgent. The SFR file will tell us whether policy rhetoric finally aligns with merger-control execution.

If it clears — even with brutal remedies — the seal is broken. Expect a cascade of Italy, Spain and CEE deals, with arbs suddenly living in a sector they had written off years ago. If it fails, the Book of Mario gets another depressing chapter: the EU declares the age of scale but governs as if it is still the age of copper

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iRobot’s collapse has got the Competition bubble on LinkedIn quite agitated. There’s a lot to get our teeth into on whether the right call was made both legally and strategically.

But that’s for other folk to worry about – all I’ll say is “the target needed an exit for financial reasons” is never going to convince enforcers to ignore clear risks to consumers, now or in the future.

What we’re interested in here is what it might mean for the blockbuster deal of 2026: the acquisition of Warner Brothers by either Paramount or Netflix.

Part of Paramount’s pitch to WBD shareholders is “running the merger control gauntlet will be easier with us”. Netflix had to offer a $5.8bn break clause because of precisely this risk. Most of the public commentary has centred on how this relates to US antitrust risk, but there’s a European component to it too.

A brief primer…

The Commission never formally prohibited Amazon/iRobot. It didn’t need to. A Phase II investigation plus a Statement of Objections (SO) was enough to make the deal commercially pointless, and the parties walked away. That matters because the Commission has effectively shown it can “kill” deals through credible foreclosure theories – bearing its teeth via a strongly worded SO – long before litigation risk is tested in court.

The foreclosure theory in Amazon/iRobot was not subtle. The Commission’s SO framed the risk as Amazon using control of its marketplace to reduce visibility and/or access for rival robot vacuum brands, strengthening Amazon’s broader platform position (including in related advertising and data markets).

In layman’s terms: if Amazon is where people buy robot hoovers and they own the dominant robot hoover, not only will they stop customers seeing other robot hoovers, but they also learn way more about how to make better robot hoovers.

A lawyer who proofread this insisted that I reference the non-horizontal guidance where this comes from. Fine, here’s point 18 of that guidance in full, just for the true merger control nerds:

“Non-coordinated effects may principally arise when non-horizontal mergers give rise to foreclosure. In this document, the term ‘foreclosure’ will be used to describe any instance where actual or potential rivals’ access to supplies or markets is hampered or eliminated as a result of the merger, thereby reducing these companies’ ability and/or incentive to compete.”

Translating that from lawyer points at the underlying enforcement signs at issue here: where a buyer controls a key route to market, the Commission will assume it can – and will – tilt the field after closing. The burden of proof is with the parties from there on out.

What’s this got to do with Warner Brothers?

The Commission’s Amazon/iRobot approach has put “control of access” front and centre: ranking, discovery, shelf space, and monetisation levers are treated as foreclosure tools even when they’re hard to observe and easy to rationalise as “quality improvements”. If there’s one thing Netflix does, it’s control access to content. And WBD makes a lot of that content, competing with other studios for juicy contracts from streamers.

Put bluntly, what happens when a dominant distribution layer combines with an important content/input layer?

The Commission’s lens will not be “does this raise the price of a subscription tomorrow?” It will be: “does the merged firm gain the ability and incentive to foreclose rival distributors and rival content suppliers over time—through content licensing, windowing, exclusivity, bundling, advertising stack integration, and discovery/placement on the interfaces that matter”.

For our legal readers, here’s point 30 of the guidance:

“Two forms of foreclosure can be distinguished. The first is where the merger is likely to raise the costs of downstream rivals by restricting their access to an important input (input foreclosure). The second is where the merger is likely to foreclose upstream rivals by restricting their access to a sufficient customer base (customer foreclosure)”

Well…yeah. Both of those things. If Netflix and, say, Disney +, wanted the same show, who’d you think gets it?

When Netflix gets it and learns something valuable about how viewers interact with it, WBD will benefit from those learnings. The benefits of additional data was specifically mentioned by the Commission when it waxed lyrical on iRobot. If it applies to hoovers, it sure as hell applies to content.

But but but…

The Commission’s 2021 merger decision in Discovery/WarnerMedia (M.10343) is a key reference point because it shows how Brussels historically analysed the audio-visual value chain: upstream content production, wholesale supply of channels, retail supply of AV services, plus advertising.

The decision is a Phase I non-opposition clearance and explicitly frames horizontal, vertical and conglomerate theories (including foreclosure) but ultimately finds no significant impediment to effective competition.

How much comfort should this give us? Not much, frankly. The competitive context has moved: streaming has consolidated, advertising models have converged, and “distribution power” now often sits with a small number of interfaces (streamers, device OSs, app stores, smart-TV platforms).

What will be decisive is how effectively Netflix frames its competitors: is it Disney + and Amazon Prime, or is it YouTube and TikTok?

Bottom line

There’s one thing we haven’t really addressed here: whether the Commission might actively prefer Netflix to Paramount for political reasons. I’ll look at those kinds of issues in a future article, but I’m sure there are people way up there in the hierarchy that secretly want to stop yet another major media conglomerate falling to a devotee of the MAGA world.

But in traditional competition policy terms, Amazon/iRobot is the Commission telling the market: if you control access, vertical deals will be analysed as if you intend to use that control unless you can prove otherwise with credible evidence and enforceable commitments.

If a Netflix/WBD-type scenario is evaluated through that lens, it spells trouble, even if the “asset” is content rather than a vacuum cleaner. And the Commission has already shown it can achieve the practical effect of blocking a deal without ever issuing a prohibition decision.