EU’s ability to challenge ‘killer acquisitions’ dealt a blow by Europe’s highest court
Illumina, a global leader in DNA sequencing technologies, has won a battle against the EU over its decision to block the merger between it and Grail, a company specialising in early cancer detection through genetic diagnostics.
The European Commission blocked the takeover of Grail by Illumina in 2022. Illumina had previously spun-off Grail in 2016, but in 2020 reached an agreement to acquire the company for cash and stock worth $8 billion.
Grail has developed a cancer-detection blood test, called Galleri, that can detect multiple types of cancer at an early stage. At the time of the acquisition by Illumina, Grail did not have sufficient turnover to meet the thresholds that are set in the EU Merger Regulation to trigger an investigation. It was also below the thresholds for national competition authorities.
Executive Vice-President Margrethe Vestager issued a statement, saying that the Commission will carefully study the court’s judgement.
“A company with limited turnover may still play a significant competitive role on the market, as a start-up with significant potential, or as an important innovator,” the statement read.
The European Commission carried out an extensive evaluation of EU merger control in 2021, based on the growing concern over the changing dynamics of mergers, particularly those witnessed in the tech and pharmaceutical sectors, that resulted in what are known as ‘killer acquisitions’.
“Killer acquisitions seek to neutralize small but promising companies as a possible source of competition,” said Vestager. “These companies’ size is often dwarfed by the large corporations that seek to acquire them, and they should be protected against the risk of elimination.”
Illumina welcomed the court’s decision, saying the judgement “confirms [its] long standing view that the European Commission exceeded its authority by asserting jurisdiction over this merger. The basis for the €432 million fine has now been removed and will no longer be payable.”
Illumina divested Grail in June 2024, following criticism from the US competition regulator, the Federal Trade Commission. Grail is now an independent public company, though Illumina maintains a minority share of 14.5%. Illumina says that it “will continue to support the company with its sequencing technology and suite of services.”
The EU’s Court of Justice found that the Commission was not authorised to encourage or accept referrals of proposed concentrations without a European dimension.
In her statement, the Vestager highlighted that several EU countries have introduced national provisions to enable certain transactions that “might have a significant competitive impact” to be notified to the competent authorities, regardless of thresholds set out by EU law.
“The possibilities for referrals to the Commission under Article 22, in compliance with today’s judgement, are thus already more extensive than they were at the time of the Illumina/GRAIL referral,” she continued.
The Commission “will now consider the next steps to ensure it is able to review those cases where a deal would have an impact in Europe, but does not otherwise meet the EU notification thresholds.”
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