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Europe’s top court dealt a blow to Brussels regulators on Tuesday after it agreed with US biotech Illumina’s claim that the European Commission had no grounds to scrutinise its $8bn acquisition of cancer screening start-up Grail in 2021.
Antitrust regulators in Brussels had probed the acquisition despite Grail having no revenues or presence in the EU, usually a requirement for transactions to be investigated, and ultimately forced Illumina to spin off Grail in June.
The decision by the European Court of Justice supersedes the commission’s earlier decision to block the deal. Illumina said a €432mn fine levied against it for completing the takeover without Brussels’ approval would no longer be payable.
“The commission is not authorised to encourage or accept referrals of proposed concentrations without a European dimension from national competition authorities where those authorities are not competent to examine those proposed concentrations under their own national law,” the court said.
The commission opened its probe into the transaction in July 2021 under a rule that allows it to review mergers if member states have requested it, even if it the deal falls below its usual revenue threshold. It blocked the tie-up just over a year later, ruling it would stifle innovation in the emerging market for cancer detection tests based on sequencing technologies.
The deal also faced opposition from regulators in the US, with the Federal Trade Commission ordering Illumina to divest Grail in 2023, arguing it would damage competition in the US market for the life-saving tests.
Margrethe Vestager, the outgoing EU competition chief, said the commission would continue to take referrals of deals “by member states that have jurisdiction over a concentration under their national rules where the applicable legal requirements are met”.
She added that the EU would continue to explore ways to expand its ability to scrutinise mergers, adding that it had now “more extensive” powers to review deals. “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,” Vestager said.
Illumina said the judgment confirmed its “long-standing view that the European Commission exceeded its authority by asserting jurisdiction over this merger”.
The ruling, which is final and cannot be appealed, may have little impact on Illumina since the company already sold Grail to comply with an EU order, keeping a minority 14.5 per cent stake.
However, it could have implications for future deals, including those involving Big Tech.
Kay Jebelli, at Chamber of Progress, a tech sector group whose members include Apple and Amazon, welcomed the court’s judgment.
He said: “In this milestone judgment, the court has pushed back against the commission’s unconstitutional power-grab. This should be a warning to all future commissioners; you cannot simply create new competition powers from thin air.”
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