Legal certainty restored in the field of EU merger control as the Illumina/Grail saga comes to an end

Earlier this week the Court of Justice of the European Union (the “CJEU”) published its long-awaited judgment in the joined cases C-611/22 P Illumina v Commission and C-625/22 P Grail v Commission concerning the European Commission’s powers to review mergers that fall under the thresholds of both EU and national merger control rules. The CJEU finds that the Commission has exceeded its authority when accepting to review Illumina’s acquisition of Grail, declaring that the Commission may not accept requests from national competition authorities if those authorities lack jurisdiction under their own laws. The judgment limits the Commission’s authority to investigate certain types of mergers and restores legal certainty in the field of EU merger control.

Introduction and background

In September 2020, Illumina, a company established in the United States which supplies solutions for genetic and genomic analysis, entered into an agreement to acquire control of Grail, a company established in the United States, which develops blood test for the early cancer detection. The proposed concentration lacked an EU dimension for the purposes of Regulation No 139/2004 (the “Merger Regulation”) as the turnover of Illumina and Grail did not exceed the relevant thresholds. In fact, Grail did not have any turnover in the European Union or elsewhere in the world. The concentration was thus not notified to the Commission, nor to any national competition authority in the EU since it did not fall within the scope of national merger control rules either.

In December 2020, the Commission received a complaint concerning the proposed concentration. It then invited the Member States to submit review requests under Article 22 of the Merger Regulation. The provision, which is a remnant from the time when certain Member States still lacked national rules on merger control, stipulates that Member States may request the Commission to review a transaction if it may affect trade between the Member States and threatens to significantly affect competition within the territory of the requesting Member State. Having received requests from a number of national authorities, the Commission decided to initiate a review of the concentration. This decision was unsuccessfully challenged by Illumina and Grail before the General Court which chose to dismiss the complaint and uphold the Commission’s decision.

The judgment of the CJEU

On 3 September 2024, the CJEU published its judgment, which sets aside the judgment of the General Court and annuls the Commission decision. In its judgment, the CJEU finds that the General Court has erred in its interpretation of the Merger Regulation, allowing national competition authorities to request the Commission to examine concentrations that lack both an EU dimension and fall outside the scope of national merger control rules. The interpretation advocated by the Commission and supported by the General Court does, according to the CJEU, undermine the effectiveness and predictability that parties to a concentration must be guaranteed. For example, the CJEU concludes that the threshold, used for determining whether a transaction shall be notified or not, is “an important guarantee of foreseeability and legal certainty for the undertakings concerned”, since it is essential for those undertakings to identify whether their proposed transaction must be notified or not and, if so, by which authority and subject to what requirements.

Concluding remarks

To conclude, it is now clear that the Commission cannot use Article 22 of the Merger Regulation to extend its powers to review mergers that fall below both EU and national merger control thresholds. The judgment of the CJEU restores legal certainty and will hopefully boost innovation as founders of innovative companies will not have to fear that a potential exit is blocked by the Commission.