In a recent judgment, the Court of Justice of the European Union (ECJ) restricted the European Commission’s ability to review mergers and acquisitions below the EU Merger Regulation’s jurisdictional thresholds, marking a significant shift in how cross-border transactions are regulated within the EU, McGuireWoods London partner Matthew Hall wrote in a Sept. 11, 2024, Law360 article.
On Sept. 3, 2024, the ECJ ruled in favor of Illumina Inc. and Grail LLC, finding that the European Commission does not have the ability to review, on the basis of a “referral” from an EU national merger regulator, transactions that, as well as falling below the EUMR’s turnover thresholds, are also not subject to that country’s national merger control law. Hall explained that the judgment, which overturned an earlier decision by the EU General Court, provides greater legal certainty for transaction parties but there are still challenges in navigating merger control rules in the EU. Hall noted that the ECJ clarified that “the EU Merger Regulation does not provide for a general ‘corrective mechanism’ allowing for [the Commission] to control any transaction with potential effects on the structure of competition in the EU.”
Hall noted that while the ruling is a setback for the European Commission, which had been particularly concerned about “killer acquisitions” in the digital and pharmaceutical sectors, “significant uncertainties remain”. This is especially true as certain EU member states can still require notification of transactions that do not meet standard thresholds, leaving room for continued regulatory scrutiny at the national level and also possible referrals of those transactions to the Commission.
“The ECJ’s judgment in Illumina-Grail is a welcome and appropriate check on the commission’s power to review transactions that fall below the turnover-based jurisdictional thresholds in the EU Merger Regulation,” concluded Hall, an antitrust lawyer and member of McGuireWoods’ Government Investigations & White Collar Litigation Department. “However, there remain many pitfalls in EU merger control.”