The Court of Justice of the European Union has annulled the judgment of the General Court of the European Union of July 2022 dismissing the action brought by Illumina, a US company specialising in genomic sequencing, against the decisions of the European Commission to declare itself competent to analyse its merger with the US company GRAIL, which develops cancer screening tests (case T-123/22 - see EUROPE 12992/27).
Also annulled are several decisions of the European Commission which, in July 2023, had sanctioned Illumina for having completed the acquisition of GRAIL during the investigation and without prior authorisation (see EUROPE 13224/24) and, in April 2024, had approved the plan for the sale of GRAIL by Illumina (see EUROPE 13390/11).
In its judgment, the General Court ruled for the first time on the ‘referral mechanism’ enshrined in the EU Merger Regulation (139/2004), which provides for the possibility of referring a merger that does not have a European dimension to the European level.
In the main proceedings, the Commission asked the national authorities to submit any requests to it to examine the proposed merger between the two US companies if they considered that the merger would have adversely affected competition on their territory. The French, Greek, Belgian, Norwegian, Icelandic and Dutch authorities had submitted such a request.
In its judgment, however, the Court of Justice found that “the General Court erred in concluding that a literal, historical, contextual and teleological interpretation of the Merger Regulation allowed national competition authorities to ask the Commission to examine a concentration that not only lacks a European dimension but also falls outside their competence to review such a concentration on account of the fact that it does not reach the applicable national thresholds”.
In particular, the General Court wrongly found that the Regulation provides for a ‘corrective mechanism’ aimed at effective control of all mergers that have a significant effect on the structure of competition in the Union.
According to the Court, the thresholds laid down in EU law for determining whether or not a transaction must be notified constitute an important guarantee of predictability and legal certainty for the undertakings concerned. They must be able to easily determine whether their proposed operation should be subject to prior review and, if so, by what authority and under what procedural requirements.
According to the European Commissioner for Competition, Margrethe Vestager, the EU institution, based on the literature and the opinions of stakeholders, remains convinced that “certain transactions that do not reach EU notification thresholds may nonetheless be harmful to competition in Europe” citing the case of killer acquisitions by large companies aimed at neutralising promising start-ups that could overshadow them.
In a press release, Ms Vestager also gave assurances that the Commission would continue to examine merger cases involving amounts below the European thresholds, but which would be transferred to it via the ‘referral mechanism’. There are now more possibilities for referral than when the Illumina/GRAIL case was referred, she noted.
A spokeswoman for the Commission, Lea Zuber, reported that eight Member States - Denmark, Ireland, Italy, Sweden, Slovenia, Lithuania, Latvia and Hungary - had adopted national rules allowing a merger with no European dimension to be referred to the European level. She also mentioned other cases transferred to the Commission via the ‘referral mechanism’, such as the ‘Meta customers’ and Inmarsat cases.
And the Commission has announced that it will consider any new initiative enabling it to deal with cases with a potential impact in the EU without exceeding the European notification thresholds.
To see the judgment of the Court of Justice: https://aeur.eu/f/dap (Original version in French by Mathieu Bion)