"When Big Fish Eat Little Fish": To Require Notification Of A Merger That Would Not Be Subject To Mandatory Notification

1. Introduction

In today's rapidly consolidating and digitalizing markets, the phenomenon of the "big fish eat little fish"—that is, large incumbents acquiring potential or innovative smaller rivals—poses one of the most pressing challenges for competition law. Traditional merger control regimes are built upon quantitative thresholds such as turnover or transaction value. Consequently, a significant number of strategically important acquisitions fall outside prior notification requirements. This structural gap has become particularly visible in the context of so-called killer acquisitions, where dominant firms acquire smaller, often nascent competitors not to integrate their innovation but to suppress it and preempt future competition (Cunningham et al., 2021; OECD, 2020).

This article critically explores the European Union's existing merger control regime, with a particular focus on its structural shortcomings in addressing transactions that fall below mandatory notification thresholds. It evaluates the legal and practical significance of the landmark Towercast judgment delivered by the Court of Justice of the European Union ("CJEU") and examines its immediate influence on recent national enforcement practices in France and Denmark. This analysis argues that the Towercast ruling is not merely a legal clarification, but the herald of a new paradigm for the ex post scrutiny of below-threshold mergers, serving as a critical safety net against the abuse of dominance. The article culminates in a discussion of necessary legal and policy measures designed to balance robust market oversight with the need for legal certainty and predictability for economic actors.

2. The Logic and Limits of EU Merger Control

Merger control in the European Union is governed by Council Regulation No. 139/2004 (the "EUMR"). The regulation introduces a centralized "one-stop-shop" procedure for concentrations exceeding certain turnover thresholds, enabling the European Commission to assess whether a transaction would significantly impede effective competition in the internal market.

The system is designed for administrative efficiency—focusing scrutiny on the largest transactions most likely to distort competition. However, by relying heavily on blunt financial indicators, the regime risks overlooking acquisitions with substantial strategic effects but limited immediate economic size (EUMR, 2004; Motta and Peitz, 2020). This structural limitation has drawn intense scrutiny in innovation-driven and digital sectors, where early-stage firms can play a pivotal role in shaping future competition, yet their acquisitions remain invisible to the merger control radar.

Crucially, killer acquisitions exemplify this failure. A startup, though small in turnover, might possess an innovation that threatens the market position of a dominant incumbent. The acquisition of such a target serves the anti-competitive purpose of eliminating a nascent competitive constraint. Since these targets rarely meet the EUMR's turnover thresholds, the transaction bypasses the ex ante (prior) review, leaving the market structure permanently impaired. This demonstrated gap necessitates a shift towards incorporating qualitative considerations—such as data assets, user base size, or innovation potential—alongside purely financial metrics (European Commission, 2004).

3. Legal Evolution and National Practice: The Towercast Judgment and Its Implications

The Court of Justice of the European Union's Towercast ruling (Case C-449/21, March 2023) represents a landmark development in the jurisprudence of European merger control. The Court decisively clarified that a concentration falling below both EU and national notification thresholds may nonetheless be subject to ex post scrutiny under Article 102 TFEU, provided that it strengthens an existing dominant position and significantly impedes effective competition (CJEU, 2023; Gerard and Marescaux, 2023). In doing so, the Court emphasized a critical principle: formal compliance with notification requirements cannot immunize a transaction from antitrust oversight when the structural and competitive consequences are substantial, particularly in innovation-sensitive or strategically concentrated markets.

This judgment bridges the traditional divide between ex ante merger assessment and ex post antitrust enforcement, signaling that effective merger control must extend beyond mechanical threshold criteria and consider the functional impact of transactions on market dynamics and future competition. Importantly, Towercast empowers national competition authorities with interpretive and investigative discretion, granting them a legitimate legal basis to scrutinize below-threshold acquisitions that could otherwise erode competitive structures or preclude market entry. The ruling thus advances a dynamic, forward-looking conception of merger control that aligns procedural rules with the substantive objectives of EU competition law—namely, preserving competition, safeguarding innovation potential, and preventing strategic foreclosure.

The principles established in Towercast have already influenced national enforcement practices. In France, the Autorité de la concurrence's decision 24-D-05 exemplifies the operationalization of ex post review for below-threshold transactions. Although the merger in question did not meet statutory notification thresholds, the authority asserted jurisdiction under Articles 101 and 102 TFEU, emphasizing that the potential anti-competitive effects warranted investigation. While the case ultimately concluded without sanctions due to insufficient evidence of harm, it confirmed that French authorities are willing to apply the Towercast logic to preemptively address competitive risks in non-notifiable transactions (Autorité de la concurrence, 2024).

Similarly, the Danish Competition and Consumer Authority's intervention in the Uber–Dantaxi merger illustrates a proactive and pragmatic application of the Towercast framework (Danish Competition Authority, 2025). The authority required formal notification for a transaction initially deemed below the statutory threshold, based on its significant potential to impede competition in Denmark's taxi market. This decision underscores a growing recognition among national regulators that structural and strategic considerations, rather than mere financial metrics, must guide merger oversight. By mandating notification and review post hoc, the Danish authority effectively operationalized ex post control to safeguard competitive dynamics in a high-impact market.

Collectively, these developments demonstrate that Towercast is reshaping merger control across the EU. They underscore the necessity of a flexible, risk-sensitive approach that transcends rigid thresholds and prioritizes the preservation of competitive structures and innovation trajectories. At the same time, they highlight the importance of clear procedural guidance to maintain legal certainty, ensuring that firms understand when and how below-threshold acquisitions may attract scrutiny. This evolving framework represents a careful balancing act: empowering authorities to prevent strategic foreclosure while preserving predictability and investment incentives for economic actors.

4. Conclusion

The growing prevalence of "big fish eat little fish" transactions highlight the limitations of traditional threshold-based merger control in safeguarding competition and innovation. The Towercast judgment, reinforced by subsequent national practices in France and Denmark, demonstrates a decisive shift toward a flexible, risk-sensitive approach that enables ex post scrutiny of below-threshold mergers. By focusing on the substantive effects of transactions—particularly their potential to strengthen dominance or foreclose competition—this framework ensures that formal notification requirements do not shield strategic acquisitions from regulatory review.

Importantly, this evolving approach emphasizes the need for legal certainty and predictability. Effective merger control must balance the authority to intervene against anti-competitive behavior with clear procedural guidance, preserving firms' ability to plan and invest confidently. By reconciling these dual imperatives, the EU's emerging model offers a robust mechanism to prevent anti-competitive consolidation, protect innovation, and maintain dynamic market structures, ensuring that even acquisitions below formal thresholds are subject to appropriate oversight.

REFERENCE

• Autorité de la concurrence, Decision 24-D-05 of 2 May 2024.
• BCLP Law (2023), Doing a Deal as an Abuse of Dominance? The ECJ's Decision in Towercast.
• Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (EUMR).
• Court of Justice of the European Union, Case C-449/21 Towercast SASU v Autorité de la concurrence and Ministre chargé de l'Économie (Judgment of 16 March 2023).
• Cunningham, Colleen; Ederer, Florian; Ma, Song (2021), Killer Acquisitions, Journal of Political Economy, 129(3), 649-702.
• Danish Competition and Consumer Authority, Uber–Dantaxi Merger Review, 26 August 2025.
• European Commission, Guidelines on the assessment of horizontal mergers (2004/C 31/03).
• Gerard, Damien & Marescaux, Elisabeth (2023), Non-notifiable Concentrations and Residual Merger Control under Article 102 TFEU: Case C-449/21 Towercast, Journal of European Competition Law & Practice, 14(7), 427-429.
• Motta, Massimo & Peitz, Martin (2020), Killer Acquisitions and Merger Control, European Competition Law Review, 41(7).
• OECD (2020), Start-ups, Killer Acquisitions and Merger Control, OECD Policy Roundtables.

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