GC confirms EC’s jurisdiction to review non-notifiable concentrations

On 13 July 2022, the General Court favoured on the side of the European Commission as regards to its decision to review a concentration referred to it by national competition authorities, despite that concentration not being notifiable at the national level.  The referral mechanism is set out in Article 22 of the EU Merger Regulation, for more background please refer to our website, here and here.

The General Court's Judgment concerns the appeal by Illumina against the European Commission's acceptance of Article 22 referral requests filed by several competition authorities in relation to Illumina's acquisition of Grail.  Interestingly, none of these competition authorities had competence to review this transaction under their respective national laws. This referral decision followed the European Commission's invitation to these authorities -- following a complaint -- to request a referral pursuant to Article 22 of the EU Merger Regulation.  This was the first case in which the Commission accepted a referral under these circumstances.

The General Court confirmed that the European Commission was allowed to accept referral requests of competition authorities in this specific situation:

• Based on the wording of Article 22 (and its origin), the General Court concluded that the European Commission was allowed to do so.
• The General Court moreover considered the context of the provisions in the EU Merger Regulation (in particular the other referral provisions) to confirm this.
• It also qualified the European Commission's policy as a corrective mechanism contributing to the EU Merger Regulation's objective to achieve effective control of all concentrations with significant effects in the EU.
• The General Court rejected Illumina's arguments regarding the principle of conferral of competence, the principle of subsidiarity, the principle of proportionality and the principle of legal certainty.

The General Court equally sided with the European Commission regarding the starting point of Member States' 15 working days deadline, ruling that for Member States to be 'made known' of a concentration, an active transmission of information is required whereby this information needs to be sufficient for the national authority to make its preliminary analysis as regards the application of Article 22 of the EU Merger Regulation. As a result, public reporting on a concentration was not deemed sufficient for a Member State to be considered to have been made known of that concentration. In this case, the General Court ruled that the starting point of this deadline was therefore the European Commission's invitation to the EU Member States' respective competition authorities.

The General Court provided however some nuance in this respect, ruling that the European Commission needs to act within a reasonable period to avoid any possible impact on the rights of defence of the undertaking(s) concerned. In this case, the 47-day period after receipt of a complaint was considered to be unreasonable but without negative consequences on Illumina's right of defence (and therefore not sufficient for an annulment).  

The General Court also rejected Illumina's argument that the Commission had breached the principle of the protection of legitimate expectations. It ruled that such principle is applicable only in case of a precise, unconditional and consistence assurance originating from authorised, reliable sources.  The fact that non-notifiable mergers were up until recently assumed to be non-contestable from an EU competition law perspective was therefore not considered sufficient in this respect.

This Judgment will undoubtedly strengthen the European Commission's resolve to review so-called killer acquisitions that are not notifiable, in particular in the pharmaceutical and digital sectors. The soon-to-be adopted Digital Markets Act's obligation on digital gatekeepers to inform the European Commission of each concentration may play an important role in this respect.  

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