Legal teams at private equity and venture capital sponsors evaluating cross-border control transactions under the 2025 OECD Merger Review Recommendation are increasingly using AI to draft investment-committee memos on merger-clearance exposure, generate deal-team briefings on the failing firm defence and remedies hierarchy, and validate the operative-section structure of the Recommendation against the OECD text before commitment papers issue.
The RLB Specialist Panel put a set of practitioner-grade questions on the 2025 OECD Merger Review Recommendation to two frontier AI models with web search active. Each question is prepared by the Panel based on the workflows that legal teams at private equity and venture capital sponsors actually use AI for under the OECD's 2025 revision of the Recommendation of the Council on Merger Review (OECD/LEGAL/0333). The Panel then binds every AI response to verbatim regulator-issued source text held as primary substrate.
On the 2025 OECD Merger Review Recommendation, the AI subjects returned four hallucinated answers for legal teams at private equity and venture capital sponsors, in the form of Structure Inflation, Misattributed Cross-Jurisdictional Doctrine, and Inter-Alia-to-Closed-Test Conversion.
For legal teams at private equity and venture capital sponsors 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 published Specialist Panel findings carry the following citation identifiers:
RLB-H-INT-OECD-OECD-MERGER-REVIEW-RECOMMENDATION-2025-Q001-Opus47 (Invented operative sections; ex-post mandate omitted)RLB-H-INT-OECD-OECD-MERGER-REVIEW-RECOMMENDATION-2025-Q001-Sonnet46 (Invented operative sections; ex-post mandate omitted)RLB-H-INT-OECD-OECD-MERGER-REVIEW-RECOMMENDATION-2025-Q002-Sonnet46 (EU remedy hierarchy misattributed as OECD Section IV.3 standard)RLB-H-INT-OECD-OECD-MERGER-REVIEW-RECOMMENDATION-2025-Q005-Opus47 (Failing-firm third limb mischaracterised; open test presented as closed)RLB-H-INT-OECD-OECD-MERGER-REVIEW-RECOMMENDATION-2025-Q005-Sonnet46 (Failing-firm third limb mischaracterised; open test presented as closed)RLB-H-INT-OECD-OECD-MERGER-REVIEW-RECOMMENDATION-2025-Q006-Opus47 (Transnational co-operation invented as operative section; Section V omitted)This is the consolidated view of findings. Click the Citation IDs or 'see details →' on any item for the full details for each finding.
AI tools asked to map the 2025 Recommendation's operative structure returned a six-section schema that does not exist, adding 'Cross-Jurisdictional Co-operation' as an operative RECOMMENDS block and omitting Section V's ex-post assessment mandate entirely. For a Legal team at a PE or VC firm, this error enters the deal file at the regulatory mapping stage: a jurisdictional analysis that treats co-operation as a standalone operative obligation and ignores the ex-post assessment section will misdirect both internal compliance design and outside counsel briefings across adherent-state filings.
Correcting a foundational structural mischaracterisation once it has propagated into deal memos, IC packs, and external counsel instructions typically requires a full re-review pass, remediation cost that falls entirely on the deal's legal budget at a point when timeline pressure is highest.
When asked about the Section IV.3 remedy hierarchy, an AI tool substituted the EU merger-control practice framework, fix-it-first divestitures ranking highest, then upfront-buyer-with-trustee mandate, then crown jewel packages, as if it were the operative text of the OECD Recommendation. The Recommendation's actual internal priority within structural remedies is the standalone-business preference; it contains no timing-based three-sub-tier hierarchy.
A PE or VC Legal team using this AI output to set expectations with portfolio company management and advisers about what OECD adherent-state competition authorities are likely to require would be working from the wrong framework, creating both negotiation risk (misaligned concession positions) and timeline risk (surprise authority pushback on proposed remedy structures).
AI tools asked about the failing-firm defence under Section III.11.b produced two compounding errors: they mischaracterised the third condition (substituting 'assets would inevitably exit the market' for the Recommendation's actual comparative-harm standard, 'that the exit of the firm's assets would cause more harm to competition than the merger') and presented the three conditions as an exhaustive closed test, suppressing the 'inter alia' qualifier that signals authorities may require additional evidence.
For a PE or VC firm evaluating a distressed acquisition where a failing-firm defence is the clearance strategy, both errors directly affect whether the defence is advised as available, how it is framed in authority submissions, and what evidence package is prepared, each of which affects deal economics, signing risk, and the firm's credibility with competition authorities across multiple jurisdictions.
AI tools asked to describe what the 2025 Recommendation addresses and what was deliberately excluded produced a scope characterisation listing 'Transnational Co-operation' as operative section (v) and 'Monitoring' as section (vi), while omitting Section V's ex-post assessment mandate as a standalone operative section. This error mirrors Finding 1 and confirms the mischaracterisation is systematic rather than isolated.
For Legal teams conducting regulatory gap analysis, determining what obligations flow from adherence to the Recommendation versus what is governed by other OECD instruments, a wrong scope map produces wrong gap analysis, leading either to missed obligations or to unnecessary compliance work directed at non-operative provisions.
Every finding on this page compares an AI subject's account of the rule against the regulator's verbatim text from the regulator's own portal. Both are linked. Each delta, its root causes, and impact analysis are documented and published with immutable Citation IDs.