July 13, 2022

General Court of the EU will assess Illumina’s acquisition of Grail

The General Court of the European Union ruled on July 13, 2022 that it had the competence to assess market concentration resulting from a proposed merger,  even though the concentration would not have a European dimension, and would not fall within the scope of any European Union member state’s national merger control laws.

The case involves the 2020 announcement by Illumina, Inc., of its proposed acquisition of Grail, a biotechnology start-up.  Both companies are headquartered in California.  Because the merger did not have a European dimension within the meaning of Article 1 of Council Regulation (EC) No 139/2004 of January 20, 2004 (the “Merger Regulation”),  it was notified neither to the European Commission nor to the EU Member States or European Economic Area states.  However, a complaint was received by the Commission on December 7, 2020.  Forty-seven business days later, on February 19, 2021, the Commission sent a letter to member states to inform them of the concentration.

Thereafter, on March 9, 2021, the concentration was referred to the Commission by the French competition authority pursuant to Article 22 of the Merger Regulation, which authorizes referral requests regarding concentrations that affect trade between European member states, and may affect competition in a European jurisdiction; the French request was later joined by separate requests by the Greek, Belgian, Norwegian, Icelandic and Dutch competition authorities.  On March 11, 2021, the Commission informed Illumina and Grail of the referral request, and on April 19, 2021, accepted the referral request.  Illumina (together with Grail) brought an action to annul the Commission’s acceptance of the referral.

Illumina argued, firstly, that the court did not have the competence to accept the referral.  The court, ruling for the first time on the application of Article 22 of the Merger Regulation to a non-notifiable merger, held that the Commission is competent to accept the referral:

  • The phrase “any concentration” in Article 22 allows member states to refer “any concentration” to the Commission, if it satisfies the cumulative conditions enumerated in the regulation;
  • The mechanism in Article 22 that allows for referral is a corrective mechanism designed to permit effective control of all concentrations with significant effects on the structure of competition in the European Union.

Secondly, the court addressed Illumina’s objection that the referral requests were not timely filed.  Noting that Article 22(1) of the Merger Regulation requires that, in cases where notification is not required, a referral request be made within 15 working days of a concentration’s being “made known” to the applicant state.  Hence, whether the referral applications were time-barred would depend on the interpretation of the phrase “made known.”  The court considered the phrase to mean the active transmission of information to the member state concerned, and therefore concluded that the invitation letter sent by the Commission on March 11, 2021 triggered the 15-day clock.  And since the interval between emission of the invitation letter and the filing of the referral request was 14 days, the request was not time-barred.  The court warned that the 47-day lapse between receipt of the complaint and issuance of the invitation letter by the Commission was unreasonable.  At the same time, however, the court found that the Commission’s failure to comply with a reasonable time limit did not prejudice Illumina and Grail, and could not be used to justify the annulment of the court’s decision to accept the referral.

Thirdly, Illumina argued that the Commission’s acceptance of the referral breached the principles of legal certainty, and infringed upon the company’s legitimate expectations of legal certainty.  The court rejected these assertions as unsubstantiated.

Press release | Judgment