Mind the engagement gap: why business testimony matters in merger control

This blog post is an updated version of an article first published in Competition Policy International. 

Introduction: From economic models to commercial reality 

In the past, merging parties often saw economic evidence – such as a well-crafted merger simulation or upward pricing pressure analysis – as the best way to convince competition authorities to clear a transaction. 

That is no longer enough. 

Economic analysis still matters. But regulators are increasingly focused on whether they really understand how a business works and how the relevant markets are likely to evolve. They want to hear directly from the people who run the business, make investment decisions, set product strategy and know why particular commercial choices were made. 

This is especially true in dynamic sectors, where market shares may say little about future competition and where theories of harm involving ecosystems, innovation, investment or potential competition are more common. In those cases, the most important question is not what the market looked like last year, but how it will develop over the next five years. 

This change is being hardwired into process. 

In the UK, the CMA’s revised Phase 2 process gives merging parties an additional opportunity at the start of an inquiry to present their views on the Phase 1 decision to the decision-makers in person. The CMA also expects senior business executives to engage directly and candidly during the investigation, to explain the business, sector and deal rationale. 

We see a similar trend in Brussels. Businesses already have opportunities to engage with the European Commission through teach-ins, site visits and State of Play meetings. Such direct engagement will be increasingly important in light of the Commission’s greater openness to merger efficiencies (or “theories of benefit”), as signalled in the draft EU merger guidelines. In particular, businesses should be prepared to explain the role of mergers in supporting innovation, investment, resilience and scale.  

The message on both sides of the Channel is clear: evidence grounded in lived commercial reality now carries as much – and sometimes more – weight than even the most sophisticated econometrics. 

Why direct business engagement matters 

The first reason business engagement matters is that it helps regulators understand internal documents. 

Internal slides, pricing spreadsheets and e-mail chains show regulators what has happened inside a business, but they rarely illuminate why it happened or why it will matter tomorrow. That gap can only be filled by people who know the business inside out. 

A COO can explain, for instance, why today’s seemingly low margin is a deliberate strategy to gain scale, or why rolling out a nationwide network requires a capital intensity that the merger alone can unlock. Such context has become essential as authorities grapple with dynamic markets where historical market shares become outdated very quickly and where tomorrow’s competitive conditions are still to be determined. 

Without appropriate context, misinterpretations of individual documents can have an outsized impact on how regulators view a merger. In Microsoft/Activision, for example, the parties argued that the CMA had misinterpreted a small number of internal documents when assessing whether Activision would have supplied its games to cloud gaming services absent the deal – a characterisation the company said flatly contradicted senior-management policy and commercial reality.  

The second reason is that direct testimony can make forward-looking claims credible. 

Claims about future investment, innovation or market entry are difficult for regulators to assess. They are inherently uncertain and often depend on managerial judgement. A model can show the returns needed for a project to proceed. But it cannot, on its own, explain how the board thinks about risk, whether management would really commit capital without the merger, or why alternative arrangements would not deliver the same outcome. 

This is where the draft EU merger guidelines are particularly important. They require parties claiming efficiencies to show that those efficiencies are verifiable, merger-specific and beneficial to consumers. For dynamic efficiencies, the draft asks parties to explain concretely how the merger changes the ability or incentive to invest or innovate compared with the counterfactual. That will often require direct evidence from the executives responsible for budgets, product roadmaps, R&D priorities and integration plans. 

Third, direct business engagement can help counter third-party narratives. 

Customers, competitors and suppliers routinely provide evidence in merger investigations. Some of that evidence will be extremely valuable. Some will be self-interested. Rivals may frame a merger as an input foreclosure strategy, an innovation “kill zone” or an attempt to entrench market power. Customers may emphasise concerns about future prices or service quality. Suppliers may worry about buyer power. 

The merging parties need to be able to respond in a way that is credible and concrete. That is difficult if the response is expressed only through legal submissions or abstract economic analysis. It is much more effective when business leaders can explain, in practical terms, where money will be spent, how supply agreements work, what the product roadmap looks like and why the alleged foreclosure strategy would not make commercial sense. 

Finally, direct engagement helps with remedies. 

Where concerns survive to the remedy stage, the regulator needs confidence that proposed commitments are workable, monitorable and consistent with commercial incentives. A remedy that looks elegant on paper may fail if it cuts across how the business is actually run. Conversely, a remedy that is grounded in existing commercial plans is more likely to be credible. 

The communication gap 

Despite their best efforts, businesses often struggle to communicate effectively with regulators, resulting in frustration on both sides and delays to the merger control process. 

One reason is the difference between “corporate-speak” and “regulator-speak”. Business leaders naturally describe a transaction by talking about growth, scale, synergies, customer experience, shareholder value and capital allocation. Regulators, on the other hand, ask about counterfactuals, diversion ratios, pass-through, entry barriers, foreclosure incentives and merger-specific efficiencies. 

When the two vocabularies collide, the conversation often stalls; executives feel they have “answered the question,” while officials hear an assertion without evidentiary support.  

This gulf is widened by blind-spot bias and asymmetric information. Industry veterans often assume that baseline commercial facts – the bread and butter of their everyday work – are obvious to everyone else. If merging parties fail to explain the logic clearly themselves, officials will fill the gap with hypotheses that may be far less helpful.  

The advisor as critical friend 

External advisors, acting as ‘critical friends’, can help close the engagement gap by performing several roles. 

• First, advisors act as translators. They turn complex commercial concepts into plain English and connect them to the legal and economic questions the regulator needs to answer. They also translate in the other direction, helping executives understand what regulators really mean when they ask about counterfactuals, incentives or merger-specificity. 

• Second, advisors act as devil’s advocates. A good advisor is not a cheerleader. Before the business appears in front of the regulator, weak answers need to be identified, challenged and improved. The hardest questions should be asked first in private, not for the first time in a hearing. 

• Third, advisors act as narrative architects. Legal submissions, economic analysis, internal documents, executive testimony and political context all need to tell a coherent story. This is becoming more important as merger control increasingly intersects with public policy questions around growth, investment, supply chain resilience and industrial strategy. 

• Fourth, advisors act as remedy strategists. Where concerns arise, they help design commitments that are capable of being monitored and enforced, but which also make sense commercially. A remedy that does not reflect how the business operates is unlikely to be credible or durable. 

Authenticity cannot be outsourced 

Merger control in 2026 is no longer primarily about a back-and-forth between econometric experts; instead, it is a conversation about real-world business incentives conducted under tight timetables and intense public scrutiny.  

The companies best placed to secure timely clearance will be those that combine three things: commercial clarity from senior executives; economic rigour that turns the narrative into testable evidence; and regulatory empathy that frames the benefits in a way that the authority can defend. 

Although lawyers and economists continue to play a critical role in the process, the growing importance of direct business testimony means that external advisors who can help to bridge the gap between boardroom and regulatory case teams are increasingly in demand.  

As critical friends, these advisors can do four indispensable things: translate jargon, interrogate blind spots, devise narratives, and, when needed, help structure remedies so that commercial reality and regulatory goals converge. They bring value not through loud advocacy, but by imposing the quiet discipline of ensuring that every data point, submission and regulator meeting sings the same tune. 

Ultimately, however, advisors can only play a supporting role. Businesses cannot outsource authenticity; the boardroom must still speak for itself.  

Authors 

This blog post was written by Flint Managing Partner Mark Caines and Flint Director Kah Loon Tham. Flint has extensive experience supporting clients to navigate the political, regulatory and policy hurdles to transaction clearance. Read our previous blog post on the Vodafone/Three merger here.