Germany, France and the Netherlands demanded tougher rules to police acquisitions of smaller rivals by large technology companies in the European Union.

While proposals to rein in digital giants’ M&A were bolted on to draft EU legislation targeting the tech industry, the current plan "lacks ambition,” ministers for the three nations said in a joint paper published Thursday.

"We have to strengthen and speed up merger control" to tackle the strategies of platform companies "systematically buying up nascent companies in order to stifle competition,” the ministers said.

The paper was signed by German Economy Minister Peter Altmaier, French Finance Minister Bruno LeMaire and French Digital Secretary Cedric O as well as Mona Keijzer, Dutch state secretary for economic affairs.

The European Commission, the bloc’s executive body, in December proposed its Digital Markets Act, under which "gatekeeper” companies will need to inform regulators about smaller acquisitions that would otherwise fall below traditional merger-review thresholds, among other obligations. Gatekeeper companies are defined by EU officials as companies with the power to control the markets in which they operate.

‘Digital Gatekeepers’ European member states and the European Parliament will negotiate changes before a final version of the DMA law is due to be agreed as soon as next year.

The EU should set clear thresholds for acquisitions by digital gatekeepers of targets with low revenues but high value and more effectively address cases of potentially predatory acquisitions, the ministers said in Thursday’s paper.

EU regulators have already started reviewing so-called killer acquisitions, which pertain to acquisition targets of potential competitors in pharmaceuticals, digital and other areas, by asking national authorities to send them deals.

The EU in May said it would review Facebook Inc.’s bid for customer service software provider Kustomer even though the deal doesn’t meet the usual EU deal thresholds.

It’s uncertain how well this merger referral procedure will work or whether it will withstand a legal challenge. The DMA rules, which are still several years from entering into force, would only cover deals by gatekeeper firms.

EU officials have become increasingly concerned with transactions, where big tech companies buy promising startups that could one day challenge them.

While the EU frequently reviews most of the world’s big deals, it missed out on past takeovers such as Facebook’s 2012 bid for photo-sharing site Instagram and other deals because its merger review guidelines didn’t let it scrutinise acquisitions of companies without large revenue streams.

 - Bloomberg