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Warning on ‘broad’ view of EU merger rules

An adviser to the EU's top court has said that European Commission decisions that led it to investigate a merger between two US companies should be annulled.

Health-technology company Illumina and Grail, a company that develops cancer-detection tests, are appealing an earlier ruling by the lower General Court that backed the commission’s actions.

Advocate General Nicholas Emiliou found that the lower court had erred in its interpretation of article 22 of the EU’s Merger Regulation.

Threshold

This article gives the commission the power to examine deals below a certain turnover threshold, if they are referred by the competition authorities of member states.

Illumina’s proposed takeover of Grail did not initially fall within the scope of EU competition rules, due to the low turnover involved in the firms’ EU activities.

Having received a complaint about the deal, however, the commission invited national authorities to submit a referral request, and received such a request from the French authorities.

The General Court had decided that a member state could sumbit such a request, even if it had no competence to review the deal under national law.

Extension

The advocate found that article 22 could not be interpreted as supporting what he described as the General Court’s “broad” view of the provision.

He added that such an interpretation would give rise to “a very significant” extension of the scope of the Merger Regulation and of the commission’s jurisdiction.

“In one fell swoop, the commission would gain the power to review almost any concentration, occurring anywhere in the world, regardless of undertakings’ turnover and presence in the European Union and the value of the transaction, and at any moment in time – including well after the completion of the merger,” the advocate stated.

The opinion of an advocate general is not binding on the court, which will decide on the case at a later date.

In 2021, the commission announced measures against the two companies for completing the deal before securing EU approval.