Illumina Outmaneuvers EU's Merger Examination
BRUSSELS – The U.S.-based gene sequencing firm, Illumina, has successfully contested the European Union's review of its $7.1 billion acquisition of Grail, a maker of cancer diagnostic tests. This court victory signifies a notable limitation on the EU's authority over mergers that fall below its stipulated revenue threshold.
Background of Illumina and Grail
Illumina initially established Grail and later spun it off in 2016. By 2021, Illumina reacquired Grail, a move scrutinized by the EU under Article 22, which is typically reserved for assessing mergers potentially eliminating market competition, especially involving startups. Despite the transaction being under the EU's financial thresholds, the Commission sought to examine it.
Concerns Over 'Killer Acquisitions'
The case attracted attention from businesses wary of the EU's power to explore minor mergers for possible "killer acquisitions." These are situations where big corporations buy small startups to eliminate potential competition, prevalent in tech and pharma sectors.
Court Rulings and Implications
Initially, the EU's General Court had sided with the Commission in 2022, supporting the EU's jurisdiction claim. However, the Court of Justice of the European Union (CJEU) overturned this decision, asserting that the Commission had overstepped its bounds. The CJEU emphasized that adherence to the revenue threshold is essential for providing companies with predictability and legal certainty.
Impact on Illumina and EU Practices
Despite this legal win, Illumina had already spun off Grail again, retaining only a minority interest as per an EU directive. Furthermore, Illumina's victory nullifies a hefty 432 million euro fine imposed by the EU and renders its challenge to the EU's veto unnecessary.
Illumina's statement underscored their belief that the Commission had overreached. "The basis for the 432 million euro fine has now been removed and will no longer be payable," Illumina declared.
Future Steps for EU Competition Regulation
EU antitrust chief, Margrethe Vestager, acknowledged the ruling's significance and its implications for future EU competition assessments. She highlighted the importance of evaluating how the Commission can review impactful deals in Europe that do not meet current threshold criteria.
This outcome serves as a precedent for companies facing EU merger reviews, potentially shielding smaller deals from stringent scrutiny under existing EU regulations.
