A recent report has advised the European Union (EU) to soften its stance on telecom industry mergers.

In the report, former European Central Bank president and former Prime Minister of Italy, Mario Draghi, said that mergers should be viewed more favorably by the EU than is currently the case.

In the 400-page report, which explored mergers across various industries, Draghi stated that Europe's competition has been too focused on consumer prices, and lost track of the global digital economy where companies need scale to compete and innovate.

“Facilitating consolidation in the telecoms sector is needed to deliver higher rates of investment in connectivity,” the report, released Monday, said. “The cornerstone initiative is modifying the EU’s stance towards scale and consolidation of telecoms operators to deliver a true single market, without sacrificing consumer welfare and quality of service.”

As reported by the Financial Times, Draghi told reporters that "competition should be more forward-looking rather than prudential."

Draghi said that regulators should focus less on blocking country-level consolidation before there are competition issues.

He adds that only when companies are showing signs of abusing their dominance should they face scrutiny.

The EU has looked to push pan-European consolidation, but this has been less desirable among European carriers, who argue that policies vary from one country to another.

In the past, mergers such as Telefónica's O2 and CK Hutchison's Three in the UK have been blocked by the EU amid competition fears. Four years later that decision was annulled by the General Court.

In the report, Draghi also touched on spectrum. He noted that there should be a harmonized spectrum policy and auction design at an EU level.

In response to the report, Jenny Lindqvist, senior vice president, head of Ericsson Europe & Latin America, said that Draghi's comments are a "timely call to action," as AI technologies begin to emerge.

“As a globally leading European technology company, we want to see a competitive Europe in the digital era, but that will only be realized if we have a sustainable telecom market that encourages investment in advanced communications infrastructure," said Lindqvist.

"The report rightly emphasizes the need for facilitating consolidation in the telecoms sector and the harmonization of spectrum pricing best practice across the EU. Both are key factors in realizing a true Single Market for telecom and to incentivize infrastructure deployment in order to close the productivity gap."