The EU’s highest court has annulled a decision by the European Commission to accept requests from national competition watchdogs to examine a merger between two US companies.

The Court of Justice of the European Union (CJUEU) overturned a previous decision by the General Court that had backed the commission.

The CJEU was ruling in a case involving health-technology company Illumina and Grail, a company that develops cancer-detection tests.

Both had appealed the lower court’s ruling.

Referral request

Illumina’s proposed takeover of Grail, announced in September 2020, 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 submit such a request, even if it had no competence to review the deal under national law.

‘Upset the balance’

The CJEU decided, however, that the lower court had erred in concluding that the EU’s 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”.

The judges stated that the General Court’s interpretation was liable to “upset the balance” between the various objectives pursued by EU merger rules.

“In that regard, the Court of Justice finds that the thresholds set for determining whether a transaction must be notified are an important guarantee of foreseeability and legal certainty for the undertakings concerned.

“Those undertakings must be able easily to determine whether their proposed transaction must be the subject of a preliminary examination and, if so, by which authority and subject to what procedural requirements,” the court concluded.

The judgment was broadly in line with the findings of an Advocate General earlier this year.

Next steps

EU competition commissioner Margrethe Vestager said that she would carefully study the judgment and its implications.

She pointed out that, in the last few years, some member states had introduced provisions allowing them to request the notification of deals that did not meet national thresholds, in situations where they might have a significant competitive impact.

“The possibilities for referrals to the commission under article 22, in compliance with today's judgment, are thus already more extensive than they were at the time of the Illumina/Grail referral,” Vestager stated.

“More generally, we 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,” she concluded.