On 13 July 2022, the European General Court (GC) upheld the European Commission's (EC's) decision to claim jurisdiction over Illumina's acquisition of GRAIL. What stands out in this ongoing merger control saga is the fact that the transaction meets neither the EU merger control thresholds nor any of the member states' thresholds (for further details please see "Killing "killer acquisitions": is the EC going too far with its policy shift on referrals under article 22 of the Merger Regulation?").
Illumina had aimed to acquire GRAIL, a subsidiary that Illumina founded in 2015, at a purchase price of $7.1 billion. On 20 September 2020, Illumina entered into an agreement and a merger plan regarding the acquisition of its sole control over GRAIL, in which Illumina already owned a 14.5 % stake.
On 9 March 2021, France's Autorité de la concurrence filed a request for the EC to review the takeover on the grounds of article 22 of the EC Merger Regulation (ECMR).(1) Belgium, Greece, Iceland, the Netherlands and Norway subsequently made the same requests.
Due to the lack of required respective turnover figures and the fact that GRAIL has not generated revenue in any EU member state, it has not been obliged to notify under article 1 and article 4(1) of the ECMR. Nevertheless, the EC granted the request to review on 19 April 2021 because the concentration was capable of affecting trade between member states and threatened to significantly affect competition in member states.
However, Illumina and GRAIL were of the opinion that the EC did not have jurisdiction to examine the transaction and filed a suit against the referral request before the GC.
During the EC's investigation, Illumina notified the implementation of the acquisition to the EC, prompting EU competition regulators to open an investigation into a possible breach of EU merger control rules. In October 2021, the EC imposed interim measures for a potential breach of the ECMR through premature implementation of the merger, prohibiting the exchange of confidential information between Illumina and GRAIL and ordering the restoration and maintenance of effective competition. If the EC's final assessment also concludes that Illumina and GRAIL did indeed carry out the takeover prematurely, they may face hefty fines.
GRAIL challenged this decision on 11 January 2022, arguing that the EC lacked jurisdiction to adopt interim measures under article 8(5)(a) of the ECMR. Later in January 2022, the GC agreed to the suspension of proceedings against the interim measures, pending a decision on the EC's competence.
In its decision of 13 July 2022,(2) the GC confirmed the EC's competence. Taking into account a literal, historical, contextual and teleological interpretation of article 22 of the ECMR,(3) a referral request under article 22 of the ECMR could also be filed independently of the scope of application of respective national merger control provisions.
With regard to Illumina/GRAIL, the GC's decision could expose the parties to the transaction to a fine of up to 10% of global turnover for gun-jumping and may strongly influence the EC's approach to article 22 referrals. On 15 June 2022, the Spanish Comisión Nacional de los Mercados y la Competencia requested the referral of Inmarsat's acquisition by Viasat to the EC.(4) If this case is also pursued, it will shed light on how the EC will deal with article 22 referrals in the future.
For further information on this topic please contact Sebastian Jungermann or Daniel Bunsen at Arnecke Sibeth Dabelstein by telephone (+49 69 979885 465) or email ([email protected] or [email protected]). The Arnecke Sibeth Dabelstein website can be accessed at www.asd-law.com.
Krystin Müller assisted in the preparation of this article.
Endnotes
(1) Council Regulation (EC) No. 139/2004 of 20 January 2004 on the control of concentrations between undertakings.
(2) Judgment of the General Court (Third Chamber, Extended Composition) of 13 July 2022 in case T-227/21, ECLI:EU:T:2022:447.