EU General Court upholds European Commission’s decision on Illumina/GRAIL merger referral

The ruling is a victory for the EC, endorsing its controversial new policy to accept Member State requests to review transactions which do not meet EU or national merger control thresholds. 

In April 2021 the EC accepted referral requests from six EU Member States to review Illumina’s acquisition of GRAIL under Article 22 of the EU Merger Regulation (EUMR). The EC’s decision marked its first formal review of a transaction that did not meet national or EU merger control thresholds. Illumina challenged the EC’s jurisdiction to review the transaction. The GC has now rejected Illumina’s appeal, confirming that the EC is able to examine any transaction referred to it by a Member State, even where national merger control thresholds are not met. The GC’s ruling constitutes a major endorsement of the EC’s new Article 22 EUMR referral policy.

Merging parties should take account of a possible Article 22 EUMR referral in their transaction documents and timetable, particularly in conditions precedent and when considering risk allocation. Deals in digital and pharma markets are likely to be top targets, as are transactions involving start-ups, innovators or companies with significant competitive potential. Executive Vice-President Vestager has reportedly said that a few potential “killer acquisitions” are on its radar.

Parties should also be aware that post-closing referrals are possible under the EC’s new policy, although its guidance states that it will generally not consider accepting a Member State referral request which is made more than six months after completion. 

For more information, please see our alert commenting on the ruling and the impact of the EC’s revised policy.