The Court of Justice in Illumina/Grail: Back to Legal Certainty and Institutional Predictability in Merger Review
The Court of Justice in Illumina/Grail: Back to Legal Certainty and Institutional Predictability in Merger Review
September 2024
Ioanna Palyvou, Partner, and Konstantinos Sidiropoulos, Senior Associate
Kyriakides Georgopoulos Law Firm
On 3 September 2024, the EU’s highest court issued its eagerly awaited ruling on the Illumina/Grail case (C-611 & 625/22P).
The Court of Justice overturned the General Court’s (“GC”) judgment – which had confirmed the European Commission’s (“EC”) competence to accept a referral request from some of the EU member states and examine the Illumina/Grail merger – and annulled the EC’s decisions by which it accepted the abovementioned requests.
Specifically, the Court of Justice ruled that the EC does not possess the authority to review mergers referred to it by EU member states under Article 22 of the EU Merger Regulation (“EUMR”), when the merger in question does not reach the EU notification thresholds and the national merger control rules of the referring EU member states.
This is a major development in the direction of legal certainty and predictability, where the judicial institution of the EU thwarted the EC’s recent attempt to expand its jurisdictional reach to review transactions it considers may harm competition, even in the absence of compulsory notifications. The Court of Justice has thus denied the EC’s jurisdiction to review below-threshold mergers by stretching the referral mechanism under Article 22 EUMR, thereby opposing the radical shift in the EC’s policy that created significant legal uncertainty.
That said, the EC seems determined to adhere to its policy of pursuing transactions where the revenues of at least one of the parties do not reflect its actual or future competitive potential and may involve the acquisition of a nascent or future competitor by established players (“killer acquisitions”).
In this vein, the EC’s Executive Vice-President, Margrethe Vestager, commented on the judgment that “there will continue to be a need to review mergers that have a competitive impact in Europe. […] [W]e will consider the next steps to ensure that the Commission is able to review those few cases where a deal would have an impact in Europe but does not otherwise meet the EU notification thresholds“.
It remains to be seen how the EC will seek to address the perceived enforcement gap regarding killer acquisitions that escape merger control jurisdictions.
See the full text of the judgment here, the press release here, and Margrethe Vestager’s statement here.
September 2024
Ioanna Palyvou, Partner, and Konstantinos Sidiropoulos, Senior Associate
Kyriakides Georgopoulos Law Firm
On 3 September 2024, the EU’s highest court issued its eagerly awaited ruling on the Illumina/Grail case (C-611 & 625/22P).
The Court of Justice overturned the General Court’s (“GC”) judgment – which had confirmed the European Commission’s (“EC”) competence to accept a referral request from some of the EU member states and examine the Illumina/Grail merger – and annulled the EC’s decisions by which it accepted the abovementioned requests.
Specifically, the Court of Justice ruled that the EC does not possess the authority to review mergers referred to it by EU member states under Article 22 of the EU Merger Regulation (“EUMR”), when the merger in question does not reach the EU notification thresholds and the national merger control rules of the referring EU member states.
This is a major development in the direction of legal certainty and predictability, where the judicial institution of the EU thwarted the EC’s recent attempt to expand its jurisdictional reach to review transactions it considers may harm competition, even in the absence of compulsory notifications. The Court of Justice has thus denied the EC’s jurisdiction to review below-threshold mergers by stretching the referral mechanism under Article 22 EUMR, thereby opposing the radical shift in the EC’s policy that created significant legal uncertainty.
That said, the EC seems determined to adhere to its policy of pursuing transactions where the revenues of at least one of the parties do not reflect its actual or future competitive potential and may involve the acquisition of a nascent or future competitor by established players (“killer acquisitions”).
In this vein, the EC’s Executive Vice-President, Margrethe Vestager, commented on the judgment that “there will continue to be a need to review mergers that have a competitive impact in Europe. […] [W]e will consider the next steps to ensure that the Commission is able to review those few cases where a deal would have an impact in Europe but does not otherwise meet the EU notification thresholds“.
It remains to be seen how the EC will seek to address the perceived enforcement gap regarding killer acquisitions that escape merger control jurisdictions.
See the full text of the judgment here, the press release here, and Margrethe Vestager’s statement here.
