EU Court Holds Back Expansion of Antitrust Reviews to Non-Reportable Transactions

The Background

In September 2020, Illumina, a U.S. biotechnology company, announced plans to acquire GRAIL, a U.S. company developing multicancer early detection tests. Because GRAIL had no customers, contracts, or revenues in the European Economic Area, the transaction was not notifiable under EU or national merger control regimes. 

Five months after the announcement of the transaction, the EC invited the 27 Member States to refer the transaction to it under Article 22 of the EUMR. Six authorities accepted to do so, which led the EC to assert jurisdiction over the transaction and, subsequently, to prohibit it. 

This reflected a strong shift in the EC's interpretation of Article 22 EUMR, which in this case was used to address a perceived enforcement gap, rather than to guarantee the efficient allocation of cases among the EU and the Member States. While this provision has long granted Member States broad discretion to refer transactions lacking EU dimension, Illumina/GRAIL was the first case in the 30-year history of EU merger control in which the EC had accepted a referral from a Member State equipped with a national merger control system but without jurisdiction over the transaction. The EC detailed its new interpretation in guidelines published in March 2021 (See our previous Commentary), in which it encouraged Member States to refer so-called "killer acquisitions": transactions that involve high-value companies and might have a significant competitive impact on the market in the future, but are not notifiable due to a present lack of EU revenues.

Illumina challenged the EC's new interpretation. At first instance, the EU General Court ("General Court") upheld the referral decision. 

The ECJ Judgment

In a judgment delivered on September 3, 2024, the ECJ quashed the General Court's ruling and annulled the referral decision. Before the ECJ, Jones Day represented Biocom California, a major US life science association, in support of Illumina. Apart from GRAIL, the target of the prohibited acquisition, Biocom California was the only private party to be granted leave to intervene in this case. 

The ECJ found that the General Court erred in concluding that a literal, historical, contextual, and teleological interpretation of the EUMR allowed national merger control enforcers to ask the EC to examine a concentration that not only lacks EU dimension but also falls outside their own competence. The judgment stresses that the EC's interpretation of Article 22 EUMR "undermines the effectiveness, predictability, and legal certainty that must be guaranteed to the parties to a concentration," and that companies must be able easily to determine whether their transaction needs a preliminary review, which authority will handle it, and when to expect a decision.

The ECJ reaffirmed a key institutional principle: Even if the notification thresholds were to prove insufficient to scrutinize some problematic transactions, "it is for the EU legislature alone to review those thresholds or to provide for a safeguard mechanism enabling the Commission to scrutinise such a transaction."

The judgment also outlines two other potential avenues to address problematic acquisitions falling under the notification thresholds: (i) ex post intervention by National Competition Authorities through Article 102 TFEU, which prohibits the abuse of a dominant position, as recently revived in the ECJ's Towercast judgment (See our previous Commentary); and (ii) revisions to national thresholds by Member States. 

Implications

Although GRAIL has now been spun off from Illumina, the EC confirmed that the prohibition decision would be withdrawn, as it no longer has a legal basis. The EC will also need to withdraw, or very significantly amend, its guidelines on Article 22 EUMR. It announced that it would continue to accept referrals by Member States that have jurisdiction under their national rules over a transaction falling below national thresholds. It referred in particular to the Member States, such as Italy, that have recently introduced "call-in" provisions allowing them to request the notification of transactions that do not meet national thresholds, in situations where they might have a significant competitive impact (See our previous Commentary). This may encourage National Competition Authorities not equipped with such mechanisms to promote the adoption of similar tools by their legislature. 

On the day of the judgment, the French Competition Authority, which had supported the EC throughout the procedure, reaffirmed its commitment to tackling mergers that harm competition using all available devices, not only through general antitrust laws prohibiting anticompetitive agreements and abuses of a dominant position, but also through a strengthening of its own merger control tools. 

However, under the current EUMR, it remains uncertain whether national "call-in" provisions would be considered appropriate corrective mechanisms if challenged, given the emphasis in the Illumina/GRAIL judgment on predictability and legal certainty in merger control and—in the words of the ECJ—the "cardinal importance" of jurisdictional thresholds in achieving these objectives.