Executive summary

The key findings draw on literature, data, and expert interviews, highlighting both potential efficiency gains and risks of entrenched market power.

Chapter 1 – Cross-border M&A and firm outcomes

Market concentration is rising, but M&A is only part of the story. Concentration has increased steadily across advanced economies over the last two decades. Evidence show that mergers and acquisitions explain roughly 10 percent of this development. Globalisation, the scalability of intangible assets (such as patents, software, and data), and the emergence of “superstar firms” are more important drivers. This means that concentration itself should not automatically be viewed as harmful. The main concern is whether high profits are accompanied by barriers to entry that prevent new firms from challenging incumbents.
Cross-border M&A can strengthen firms’ competitiveness, but effects vary widely. Theoretical frameworks suggest that M&A can provide efficiency gains, knowledge transfer, and market access. Empirical studies confirm that European plants acquired by foreign firms often see higher productivity. At the same time, horizontal mergers in concentrated sectors such as ICT, telecoms, healthcare, and pharmaceuticals are consistently linked with higher consumer prices and weaker competitive pressure.
Investment impacts are nuanced. Greater scale from cross-border M&A should, in theory, encourage more investment. Yet data shows that rising market concentration is generally associated with lower investment, particularly in ICT. This suggests that concentration can dampen incentives to expand capacity unless firms are subject to strong international competition.
Innovation follows a “sweet spot” relationship with competition. Evidence supports the inverted U-shaped curve: innovation peaks under moderate competitive pressure but falls when markets are either too fragmented or too concentrated. While some mergers foster knowledge transfer, concerns about “killer acquisitions” – particularly in pharmaceuticals – are growing. Overall, cross-border M&A tends to boost innovation in acquiring countries but reduce it in targets.
Productivity gains are most visible in acquired firms. Manufacturing targets often see higher productivity, survival, and employment growth after acquisition, typically linked to managerial spillovers. However, this can coincide with reduced R&D in the target, which may limit long-term productivity growth.
Nordic evidence shows a nuanced picture. Event studies covering Nordic deals consistently find positive abnormal returns for targets, while effects for acquirers are mixed. Danish micro-level evidence suggests that acquisitions can raise firm survival and employment growth. At the same time, ICT-sector consolidation in Europe (including the Nordics) is associated with higher consumer prices.
Survey evidence contradicts the “national champion” narrative. EU exporting firms report that domestic competition strengthens their performance abroad, undercutting arguments for protecting large national firms from domestic rivals.

Chapter 2 – Is more cross-border M&A desirable?

The efficiency – competition trade-off remains central. Consistent with Williamson’s framework, mergers reduce rivalry but can also deliver efficiency gains. Whether society benefits depends on whether cost savings outweigh price increases. This trade-off is especially important in digital and green transition sectors, where scale can deliver benefits, but market power can quickly become entrenched.
EU merger policy is broadly balanced, but innovation needs more weight. DG COMP’s toolkit includes market definition, concentration measures, critical loss analysis, upward pricing pressure, and merger simulations. These are well-established, but long-term effects on innovation are not systematically considered. Evidence shows that approved mergers have in some cases reduced investment and innovation. Remedies are rare (2–3% of cases), but the deterrent effect is significant: for every blocked merger, at least five are abandoned or modified. This suggests policy is not overly strict.
EU policy is under active review. Driven by the Draghi report, digitalisation, and geopolitical risk, the EU is reconsidering its merger guidelines. While these debates emphasise scale and resilience, rising concentration and markups across advanced economies remain an important counterargument: competition concerns should continue to carry significant weight.
Barriers to M&A in the Nordics are mainly structural. Beyond EU competition rules, factors such as limited capital market depth, fragmented regulatory frameworks, and national “goldplating” of EU legislation deter deals. Nordic firms often face more administrative hurdles than their US peers when scaling through acquisitions. Differences in merger thresholds and review processes across Nordic countries further increase transaction costs for cross-border deals within the region.

Chapter 3 – Policy recommendations for the Nordics

Do not treat concentration as a policy problem in itself. The priority should be addressing entry barriers, secure contestability and supporting long-term productivity and innovation, rather than focusing narrowly on concentration levels.
Strengthen innovation in merger reviews. Nordic governments should push for DG COMP to integrate long-term innovation effects into assessments, for example through patent and pipeline analysis, systematic expert panels, and innovation-focused simulations. Current practice assesses consumer harm over a long horizon but requires innovation benefits to materialise in the short run to be considered – an asymmetry that should be corrected.
Harmonise Nordic merger rules and processes. Similar merger notifications thresholds could make the region a more integrated and attractive market for cross-border transactions. Governments should review and scale back goldplating of EU directives e.g., notification thresholds and make assessments of the number of authorities consulted in merger reviews.
Avoid protectionism. While foreign acquisitions can reduce local innovation in the short run, imposing defensive restrictions would likely invite reciprocal measures that harm Nordic competitiveness.
Balance digital concentration with strong data protection. Governments should counterbalance network effects and data dominance by ensuring data portability, interoperability, and access to key datasets. This safeguards both innovation and consumer welfare in digital markets.

Key facts and analytical results

Across advanced economies market concentration and corporate markups have increased steadily since 2000, with particularly strong growth in the technology and pharmaceutical sectors. In the United States the rise in concentration has been more pronounced than in Europe, but European markets have also experienced higher profitability and lower business dynamism. Estimates suggest that if concentration had remained at the level of 2000, EU GDP would have been almost 4 percent higher in 2020.

Exhibit 5 Evolution of global markups
Index 1980 = 1

Source: IMF (2021)

Exhibit 6 Markup increase by region
Aggregate percent change 1980–2016

Source: IMF (2021)

The role of mergers and acquisitions in driving this trend is relatively modest. More important are e.g., structural factors such as globalisation, the scalability of intangible assets including patents, software and data, and the dynamics of “superstar” firms that achieve dominant market positions. Evidence from the Danish Economic Council confirms this pattern, showing that M&A has played only a secondary role in explaining higher concentration levels (roughly 10 percent of the increase in market concentration).

In the Nordic region, the volume of cross-border M&A transactions has generally risen, reflecting growth in the overall number of deals. Exhibit 7 and 8 show developments in the number and share of Nordic cross-border deals.

Exhibit 7 Cross-border deals in Nordics
Number of cross-border deals in 2010 and 2024

Source: Mergermarket – large deals include above $100 million transactions (megadeals, large and upper-mid-market deals). Note that publicly listed companies are required to announce M&A transactions and that they will typically disclose the deal volume (amount). Undisclosed deals are typically small and are therefore classified as such.

Exhibit 8 Share of cross-border deals
Cross-border deals as a share of total deals

Source: Mergermarket. The figure shows all cross-border deals (large/small) as a percentage of total deals.

When comparing the Nordics with the United States, a gap emerges particularly in investments in ICT and digital infrastructure. Although the Nordic countries generally perform better than most EU peers on measures of competitiveness and innovation, they lag significantly behind the US in digital investment intensity. This gap has implications for productivity growth as highlighted by Draghi and others.

Exhibit 9 Private investments
Real gross capital formation, percentage of GDP

Note: Private investments expressed in real terms excluding residential investment. Source: OECD Gross fixed capital formation and chained GDP.

Exhibit 10 Investment in ICT
Gross capital formation, (2010 = 100)

Note: Index, 2010 = 100. The graph of EU includes all member states except Cyprus, Malta, Bulgaria, Rumania, and Croatia. Source: STAN OECD.

The Nordic economies display relative strength in pharmaceuticals, with several globally competitive companies headquartered in the region. In contrast, they are largely absent from the world’s largest technology firms, with only one Nordic company among the top 100 by market capitalisation.

Exhibit 11 Nordic countries are not well represented in technology
Number of top 100 largest tech companies in the world by country

Size is measured by the companies’ market cap as of August 2025.

Empirical evidence on Nordic mergers shows a complex picture. Event studies consistently indicate that target companies experience positive abnormal returns when acquired, whereas the effects for acquiring firms are mixed. The largest gains are typically found in horizontal deals in healthcare and technology, sectors where concentration and markups are already relatively high. At the same time micro-level evidence from Denmark suggests that acquisitions can improve firm survival and employment growth, particularly in manufacturing. On the consumer side, however, higher concentration in ICT and telecoms is strongly associated with higher prices.

Exhibit 12 High returns on target firms in technology and healthcare (Nordics)
Returns to shareholders of acquired firms

Source: Opsahl (2022). Return is measured as the cumulative abnormal return (CAR) for target firms. Data from 2001-2019.

In sum, the factual evidence shows that while cross-border M&A is not the main driver of rising concentration, it plays a significant role in shaping firm-level outcomes, particularly in strategically important sectors. The Nordic position is characterised by strong performance in pharmaceuticals, weaker capacity in technology, and a structural investment gap relative to the United States.

While the aggregate impact of rising concentration is complex, the evidence indicates that mergers and acquisitions can generate broad welfare gains under certain conditions. These gains typically arise when transactions enhance efficiency and scale without significantly weakening competitive pressure.

Exhibit 13 summarises the circumstances under which cross-border M&A is most likely to benefit society as a whole and are based on our review of the literature in chapter 1.

Exhibit 13
When are mergers and acquisitions most likely to benefit society as a whole?

Cross-border M&A can deliver substantial efficiency gains and economies of scale. Successful transactions are often linked to lower consumer prices despite reduced market competition, thereby increasing overall welfare. Evidence shown in the report shows that these overall welfare gains are most likely when firms:

are not close competitors,
operate in internationally competitive markets,
acquire comparatively smaller target companies,
are active in different industries, and
can realize economies of scale.

Policy insights and Nordic implications

At the European level, the evidence suggests that DG COMP’s merger control framework is broadly effective. The available tools, including concentration measures, critical loss analysis, and merger simulations, are well developed and flexible. Enforcement is not overly strict. However, long-term effects on innovation are not systematically assessed in merger reviews. A stronger emphasis on innovation, supported by methods such as patent and pipeline analysis, structured expert panels, or dynamic competition models, would make merger control more forward-looking and aligned with Europe’s broader industrial and technological challenges.

For the Nordic region, policy implications are twofold. On the one hand, governments should continue to support a competitive environment and avoid the temptation to treat rising concentration as a problem in itself. On the other hand, Nordic policymakers should recognise the structural barriers that limit cross-border deal activity within the region. These barriers include fragmented regulation, inconsistent enforcement practices, and over-implementation of EU directives that add administrative burdens. Harmonising notification thresholds and procedures across Nordic countries could reduce transaction costs and make the region more attractive for investors.

At the national level, governments should focus on the broader investment and innovation environment. Deepening capital markets, strengthening access to venture capital, and improving the regulatory environment for scaling are critical to ensuring that Nordic firms can compete internationally. Particular attention should be given to digital markets, where network effects and control of data create risks of entrenched market power. Stronger data protection, combined with measures to ensure portability and interoperability, would help safeguard competition and innovation in these sectors.

Looking ahead, Nordic governments could play a more proactive role in shaping the European debate on competition and industrial policy. Joint initiatives on capital market integration and regulatory cooperation could strengthen the region’s ability to attract investment and support firm growth. Finally, active Nordic participation in the ongoing review of EU merger guidelines would help ensure that issues central to the region – such as innovation, the green transition, and digital transformation – are fully reflected in the future framework for merger control.

Nordic governments should place the strongest emphasis on scaling and productivity, by strengthening capital markets and implementing structural reforms that go beyond competition policy. While M&A plays a role in enhancing competitiveness, it cannot by itself close the productivity gap with the United States. At the same time, procedural streamlining – through harmonised merger review processes, reduced goldplating of EU rules, and stronger focus on long-term innovation – can make the region more integrated and attractive for investment. Finally, only a limited degree of strategic flexibility should be pursued, where competition policy takes account of exceptional cases of systemic or geopolitical importance.

What should Nordic governments prioritize to enhance growth and resilience?

A LITTLE … STRATEGIC FLEXIBILITY	Nordic countries can participate in discussions about broadening the scope of competition policy beyond consumer welfare and maximized competition. However, we argue this should be highly limited and reserved only for firms and assets with clear society-wide strategic importance, such as those related to supply security or systemic dependencies. Extending the traditional scope of competition policy to include e.g. geopolitical concerns comes at a societal cost.
FURTHER … PROCEDURAL STREAMLINING	Nordic governments can reduce the risk of over-implementation of EU regulation (e.g. merger review thresholds) and advocate for merger reviews to consider long-term innovation effects. Nordic countries should also continue harmonizing merger review processes, as well as tax and compliance requirements, to make the region more economically integrated and thus more attractive for foreign investors.
A LOT MORE ... SCALING AND PRODUCTIVITY	Productivity growth can be supported by stronger capital markets and structural reforms beyond competition policy. While Nordic countries are active in M&A, cross-border deals alone will not close the productivity gap with the United States. National-level reforms to strengthen innovation, skills, and investment are therefore essential.