ECJ Limits European Commission's Powers

Andrea Pomana, antitrust partner in the Frankfurt office, published an article in the German newspaper Frankfurter Allgemeine Zeitung titled “ECJ Sets Limits for the European Commission”. The article (in German) can be found here.

In this article, Andrea discusses a significant ruling by the European Court of Justice (ECJ) that has profound implications for the European Commission's powers under the Merger Control Regulation.

Andrea delves into the details of the ECJ's decision and its broader impact on merger control within the European Union. The ECJ ruled that the Commission cannot extend its powers under the Merger Control Regulation. This ruling came in response to the Commission's attempt to block the acquisition of the cancer test manufacturer Grail by the biotech company Illumina. Notably, this transaction did not require notification to the Commission or any EU member state. The Commission's practice of encouraging member states to submit a referral request was deemed an impermissible extension of its powers, violating the principles of subsidiarity, proportionality, and legal certainty.

The Commission had argued that the regulation empowered it to examine so-called killer acquisitions, where large companies acquire innovative startups to eliminate potential competition. However, the ECJ pointed out that an expansive interpretation of the regulations leads to legal uncertainty and that it is up to the legislator to provide appropriate control mechanisms. Companies must be able to clearly understand whether and by which authority their transactions need to be reviewed.
Andrea concludes that the judgment is welcomed as an important step in preserving legal certainty and the institutional balance within the European Union, and it requires the Commission to retract its decisions related to the prohibited acquisition. It comes at a time when regulatory burdens on companies are increasing, highlighting the need for stricter application of the principle of subsidiarity to strengthen Europe as an investment location.