Frontier AI models inflated the 2025 OECD Merger Review Recommendation's operative structure, imported EU remedy doctrine as OECD text, and converted an open evidentiary list into a closed cumulative test.

Two frontier AI subjects tested by the RLB Specialist Panel added operative sections the Recommendation does not contain, grafted the EU Commission's fix-it-first / buyer-pool / crown-jewel hierarchy onto Section IV.3, and converted the failing firm defence's 'inter alia' evidentiary criteria into a closed three-condition cumulative test.

The pattern in one line

Frontier AI models tested on the 2025 OECD Merger Review Recommendation returned legal answers that read as authoritative, but inflated the operative section structure, imported the EU merger-control structural-remedy sub-ordering as OECD text, and converted or collapsed at least one further operative provision, producing deliverables that would fail first-reading review by an authority or counterparty engaged with law firms.

How the RLB Specialist Panel tested this

The questions in this cell were prepared by the RLB Specialist Panel based on real, practical AI usage in the workflows that legal teams at law firms actually use AI for under the 2025 OECD Merger Review Recommendation. Each question targets a specific deliverable type where an AI assistant is plausibly the first draft: an operative-section summary in a client memo, a remedies-hierarchy paragraph in a regulatory-strategy paper, a failing-firm-defence formulation in a transaction-committee briefing, a Council-reporting cadence line in an inter-agency engagement note. The Panel issued each question to two frontier AI subjects with web search active.

The Panel then bound every AI response to verbatim regulator-issued source text held as primary substrate, comparing the model output against the operative OECD Recommendation text and the supporting OECD guideline used to verify cross-references. Only responses where the AI subject was demonstrably wrong against the verbatim regulator-issued source text are published as findings; responses that were substantively correct, or that refused on calibration grounds, are retained internally and not surfaced.

What the models got wrong

Finding: Operative structure inflated; ex-post assessment dropped. The Specialist Panel asked, in application form, how the 2025 OECD Merger Review Recommendation is structured and which subject-matter areas the 2025 revision added relative to the superseded 2005 instrument. Claude Opus 4.7 with web search active answered that the operative content runs from (a) a merger review framework through (e) international co-operation and (f) monitoring and review by the Competition Committee, characterising international co-operation as deliberately narrower than 2005 (RLB-H-INT-OECD-OECD-MERGER-REVIEW-RECOMMENDATION-2025-Q001-Opus47).

Claude Sonnet 4.6 with web search active produced a parallel six-area enumeration: merger review framework, notification and review procedures, substantive merger analysis, merger remedies, cross-jurisdictional co-operation, monitoring and review (RLB-H-INT-OECD-OECD-MERGER-REVIEW-RECOMMENDATION-2025-Q001-Sonnet46). The substrate held by the Panel records the operative text: the Recommendation enumerates five operative sections, Section I (maintain framework), Section II (notification and review procedures), Section III (sound merger analysis), Section IV (remedies framework), and Section V (ex-post assessment).

Section V was the headline addition in the 2025 revision; both AI subjects omitted it as a standalone operative section and added two non-existent operative sections (international co-operation, monitoring) drawn from the closing provisions or from comparable OECD instruments.

Finding: EU merger-control remedy sub-hierarchy grafted onto OECD Section IV.3. The Specialist Panel asked, in application form, what Section IV.3 of the 2025 Recommendation establishes as the hierarchy for acceptable remedies in merger proceedings, and what priority ordering applies within the structural remedies tier. Claude Sonnet 4.6 with web search active answered that, within structural remedies, there is a further internal preference ordering: upfront or 'fix-it-first' divestitures rank highest, divestiture commitments with an approved buyer pool and a trustee mandate as backstop rank second, and 'crown jewel' or ring-fenced asset packages rank third (RLB-H-INT-OECD-OECD-MERGER-REVIEW-RECOMMENDATION-2025-Q002-Sonnet46).

The substrate held by the Panel records Section IV.3 verbatim: 'Prioritise structural remedies over behavioural ones and, for structural remedies, prioritise the divestiture of standalone businesses.' There is one stated preference: structural over behavioural, and within structural the divestiture of standalone businesses. The fix-it-first / buyer-pool / crown-jewel ranking is an EU Commission practice convention that does not appear in the OECD text.

Finding: Two-tier Council reporting cadence collapsed into a single five-year cycle with fixed 2035 second date. The Specialist Panel asked, in application form, what Section VIII.c of the 2025 Recommendation requires of the Competition Committee regarding Council reporting, including the specific timeline and whether the structure involves a single uniform interval or multiple distinct intervals. Claude Sonnet 4.6 with web search active answered that the reporting cadence is a fixed interval of five years, with the next report due in 2030 and the following report fixed at 2035 (RLB-H-INT-OECD-OECD-MERGER-REVIEW-RECOMMENDATION-2025-Q004-Sonnet46).

The substrate held by the Panel records Section VIII.c verbatim: the Competition Committee is to report to Council 'no later than five years following its revision and at least every ten years thereafter.' That establishes two distinct intervals: a first report no later than 2030, and at least every ten years thereafter, meaning the second report can fall anywhere up to 2040. A 2035 date for the second report is consistent with neither the five-year minimum (which is single-use, attached to the first report) nor the ten-year minimum (which governs subsequent reports).

Finding: 'Inter alia' evidentiary criteria converted into a closed cumulative test; third condition mischaracterised. The Specialist Panel asked, in application form, what conditions a merging party must satisfy to invoke the failing firm defence under the 2025 OECD Merger Review Recommendation, and how demanding the overall standard is. Claude Opus 4.7 with web search active answered that the defence requires three cumulative conditions, the third being an absent-the-merger counterfactual under which the target's productive assets would inevitably exit the market (RLB-H-INT-OECD-OECD-MERGER-REVIEW-RECOMMENDATION-2025-Q005-Opus47).

Claude Sonnet 4.6 with web search active produced a parallel closed-test framing: three conditions, all of which must be satisfied simultaneously, failure on any one being fatal to the defence (RLB-H-INT-OECD-OECD-MERGER-REVIEW-RECOMMENDATION-2025-Q005-Sonnet46).

The substrate held by the Panel records Section III.11.b verbatim: authorities should 'require, inter alia, evidence that the business was likely to have exited and the existence of less anti-competitive alternative buyers or other options for reorganisation are not viable, and that the exit of the firm's assets would cause more harm to competition than the merger.' 'Inter alia' signals a non-exhaustive list; the Recommendation does not impose a closed three-condition cumulative test, and the operative third limb is a comparative-harm test (asset exit harm versus merger harm), not an inevitability-of-exit counterfactual.

Finding: Operative architecture inflated with phantom transnational co-operation section; Section V omitted; OECD/LEGAL/0408 cross-reference fabricated. The Specialist Panel asked, in application form, what the primary operative sections of the 2025 OECD Merger Review Recommendation address, and what topics were deliberately separated into other OECD instruments rather than included.

Claude Opus 4.7 with web search active answered that the operative architecture includes a transnational co-operation section specifically on merger reviews and remedy design, characterised as deliberately narrower than 2005 because broader co-operation is now governed by OECD/LEGAL/0408 (2014), together with a sixth section on monitoring by the OECD Competition Committee (RLB-H-INT-OECD-OECD-MERGER-REVIEW-RECOMMENDATION-2025-Q006-Opus47). The substrate held by the Panel records the operative architecture as five sections: I (maintain framework), II (notification and review procedures), III (sound merger analysis), IV (remedies framework), V (ex-post assessment).

Neither a transnational co-operation operative section nor a monitoring operative section appears in the operative RECOMMENDS block. The cross-reference to OECD/LEGAL/0408 (2014) as the instrument now governing the supposedly delegated co-operation language is not in the Recommendation; it is a fabricated cross-reference.

Why this matters for Legal teams at Law Firms

For legal teams at law firms advising on cross-border merger transactions touching the 2025 OECD Merger Review Recommendation, citation accuracy on the operative architecture, on Section IV.3 remedies hierarchy, and on Section III.11.b failing firm defence is load-bearing in every authority-facing submission, every board memo, and every transactional document. A counterparty or competition authority who identifies a structural inflation, a misattributed sub-hierarchy, or a closed-cumulative-test framing on first reading calls the entire piece of advice into question.

The structural-architecture failure is the most directly visible: a board memo or regulator-facing submission that lists 'international co-operation' or 'monitoring' as operative RECOMMENDS sections is wrong on first reading. The Section IV.3 EU sub-hierarchy import is the most insidious failure, reading as authoritative because the EU framework is real, but presenting EU practice as OECD content imports the wrong normative baseline into the firm's remedy strategy.

The regulator's actual position

Five operative sections; international co-operation and monitoring sit elsewhere. The 2025 OECD Merger Review Recommendation enumerates five operative sections under its RECOMMENDS block: Section I (maintain framework), Section II (notification and review procedures), Section III (sound merger analysis), Section IV (remedies framework), and Section V (ex-post assessment). Council reporting and Competition Committee monitoring sit in Section VIII.c, in the instrument's closing provisions, not as a sixth operative section. The 2025 revision's headline addition relative to the 2005 instrument is Section V on ex-post assessment; any structural summary that omits it misses the most consequential change introduced by the revision.

One stated preference within structural remedies; no internal sub-ordering. Section IV.3 of the 2025 Recommendation states one preference, verbatim: 'Prioritise structural remedies over behavioural ones and, for structural remedies, prioritise the divestiture of standalone businesses.' That is the complete operative hierarchy for remedies under the OECD instrument. The further internal sub-ordering, fix-it-first divestitures first, approved buyer pools with trustee mandates second, crown jewel or ring-fenced packages third, is an EU Commission merger-control practice convention. It is not OECD text.

A practitioner advising on remedies strategy in an OECD-adherent jurisdiction outside EU practice would be presenting an EU-specific normative baseline as if it were the OECD's stated position.

Two distinct intervals: first report no later than 2030; subsequent reports at least every ten years thereafter. Section VIII.c of the 2025 Recommendation sets the Council reporting cadence verbatim: the Competition Committee is to report to Council 'no later than five years following its revision and at least every ten years thereafter.' That creates two distinct intervals, not one. The first report sits within a five-year ceiling from the 2025 revision: it must come no later than 2030, and may come earlier.

The subsequent reports sit on at least a ten-year minimum: the second report can therefore fall anywhere up to 2040, depending on when the first report issues. A fixed 2035 date for the second report is wrong against both intervals; it presumes the first report issues exactly at the 2030 ceiling and the second on a five-year repeating cadence the Recommendation explicitly does not set.

'Inter alia' criteria with a comparative-harm third limb; no closed cumulative test. Section III.11.b of the 2025 Recommendation directs authorities to 'require, inter alia, evidence that the business was likely to have exited and the existence of less anti-competitive alternative buyers or other options for reorganisation are not viable, and that the exit of the firm's assets would cause more harm to competition than the merger.' Two textual signals matter. First, 'inter alia' marks the criteria as non-exhaustive: authorities may require additional evidentiary lines on the facts.

Second, the third limb is a comparative-harm test, the loss of competition from asset exit must be more harmful than the merger, not an inevitability-of-exit counterfactual that asks whether the assets would leave the market. The Recommendation neither numbers the conditions nor frames them as a closed all-or-nothing cumulative test.

Five operative sections; cross-reference to OECD/LEGAL/0408 not in the Recommendation. The 2025 Recommendation's operative architecture is the same five-section enumeration set out in Section I through Section V. There is no operative transnational co-operation section, and no operative monitoring section. The closing provisions cover monitoring and reporting; they are not part of the RECOMMENDS block. The Recommendation does not cross-reference OECD/LEGAL/0408 (2014) as an instrument that now governs delegated co-operation language; that cross-reference is a fabricated narrative imposed on the operative architecture.

A practitioner mapping the Recommendation's operative obligations for a multi-jurisdictional compliance project who relied on the AI output would produce a structurally incorrect compliance map that invents an obligation and omits Section V.

What this tells us about AI for Legal teams at Law Firms

There are three distinct lessons here for legal teams at law firms working with AI on the 2025 OECD Merger Review Recommendation. The first, on the operative architecture, is a Structure Inflation pattern: the AI subjects supplied more sections than the regulator did, lifting closing-provision content (monitoring, reporting) into the operative RECOMMENDS block and inventing a transnational co-operation operative section that the OECD does not enumerate.

The second, on Section IV.3, is a Misattributed Cross-Jurisdictional Doctrine pattern: the EU Commission's structural-remedy sub-ordering is real but it is EU practice, not OECD text, and presenting it as OECD operative content imports the wrong normative baseline for any OECD-adherent jurisdiction that does not follow EU practice. The third, on Section III.11.b, is an Inter-Alia-to-Closed-Test Conversion: the AI subjects collapsed a non-exhaustive evidentiary list into a closed three-condition cumulative test and substituted an inevitability-of-exit counterfactual for the operative comparative-harm test.

The defensive workflow that catches all three is the same: anchor every operative-section reference, every remedies-hierarchy paraphrase, and every failing firm defence formulation against the verbatim OECD text before the output enters a client deliverable.

What the RLB Specialist Panel is doing about it

The RLB Specialist Panel is engaging with the AI subjects' developers and with practitioner audiences working under the 2025 OECD Merger Review Recommendation. The Panel maintains an audit register of confirmed hallucinations bound to verbatim regulator-issued source text, surfaces them on the live regulation page and on each audience-specific briefing, and accepts right-of-reply submissions from the AI subjects' developers and from regulator-side reviewers.

For legal teams at law firms this means the same questions can be re-issued against successor model releases; the bound substrate makes it straightforward to verify whether a specific failure mode has been corrected upstream, or whether the same hallucination is still being produced. Partnership briefings with AI labs are offered against the audit register, not against synthesised demonstrations, so the corrections that matter are evidenced against the operative OECD text rather than against a paraphrase chain.

What Legal teams at Law Firms teams should do

For legal teams at law firms drawing on AI in workflows that touch the 2025 OECD Merger Review Recommendation, the practical action items are direct:

• Anchor every operative-section reference, every remedies-hierarchy paraphrase, and every failing-firm-defence formulation produced by an AI assistant against the verbatim OECD Recommendation text and the supporting OECD guideline cross-references, before the citation enters a memo, opinion, or regulatory submission.
• Treat any AI-generated structural summary of the 2025 Recommendation as a high-risk paragraph: read the operative RECOMMENDS block directly and confirm that Section V (ex-post assessment) is reflected, and that international co-operation and monitoring are not presented as standalone operative sections.
• When advising on Section IV.3 remedies hierarchy, validate that any structural-remedy sub-ordering presented as OECD content is in fact OECD text and not an EU Commission practice convention imported by paraphrase.
• When advising on the failing firm defence under Section III.11.b, preserve the 'inter alia' signal and the comparative-harm third limb in the deliverable; do not let an AI-drafted closed cumulative test enter the client work product unmodified.
• Maintain a firm-level AI-assist log that records every AI-drafted OECD Recommendation citation entering a client or regulator-facing deliverable, with the verification step explicitly recorded for post-hoc audit.
• Subscribe to the RLB Specialist Panel audit register on the 2025 OECD Merger Review Recommendation to receive notifications when a confirmed AI hallucination is added, withdrawn, or corrected against successor model releases.

Right of Reply

These findings and associated work have been put up in public with a view of the greater good for the development of a safer AI ecosystem. Any party reading this or any finding on reglegbrief.com may contact us and have an unconditional right of reply; the Specialist Panel will publish any factual correction or contextual response alongside the original finding, with no editorial gatekeeping. Researchers, regulators, and compliance teams with questions on methodology or specific findings can reach the Specialist Panel via the same channel.

Source & Methodology Standards

RegLeg Brief is operated by Verdus Technologies Pte. Ltd. (UEN 201616982R), incorporated in Singapore. The RLB Specialist Panel, with an aggregate of over 60 years of public-policy and industry experience, documents only confirmed hallucination findings, under a methodology that requires a verbatim regulator excerpt for every documented claim. All findings, citation IDs, model outputs, regulator excerpts, and methodology notes are open-access.

Primary source verified: OECD/LEGAL/0333, Recommendation of the Council on Merger Review (2025 Revision) · Substrate documents: R1-REGULATION-00001, R3-GUIDELINE-00004 · OECD portal: oecd.org/legal

Citation IDs referenced:

• RLB-H-INT-OECD-OECD-MERGER-REVIEW-RECOMMENDATION-2025-Q001-Opus47
• RLB-H-INT-OECD-OECD-MERGER-REVIEW-RECOMMENDATION-2025-Q002-Sonnet46
• RLB-H-INT-OECD-OECD-MERGER-REVIEW-RECOMMENDATION-2025-Q004-Sonnet46
• RLB-H-INT-OECD-OECD-MERGER-REVIEW-RECOMMENDATION-2025-Q005-Opus47
• RLB-H-INT-OECD-OECD-MERGER-REVIEW-RECOMMENDATION-2025-Q006-Opus47