US genetic sequencing company Illumina has been vindicated after a top-level court ruled on 3 September that the European Commission (EC) overstepped its legal bounds when demanding the company divest itself of biotech company Grail.
The EC is now facing a serious blow to its ability to regulate acquisitions and mergers after the Court of Justice for the European Union (CJEU) ruled that the deal did not have enough of an impact on the continent for competition bodies to become involved.
The Luxembourg-based court has annulled the ruling of the 2022 court case of Illumina versus the EC, in which the company was ordered to divest itself completely from Grail after spending $7.1bn acquiring it. The EC now has two months to appeal the decision.
While the EC can order its national representative and competition bodies to investigate deals and mergers under Article 22 of its Merger Regulations, the court ruled that the deal fell short of the required threshold of value and jobs within the EU-affected area to trigger a competition investigation.
In a statement released alongside the decision, the CJEU stated: “The Court of Justice finds that the General Court erred in concluding that a literal, historical, contextual and teleological interpretation of the Merger Regulation allowed national competition authorities to ask the EC to examine a concentration that not only lacks a European dimension but also falls outside their competence to review such a concentration on account of the fact that it does not reach the applicable national thresholds.”
At the same time, the ruling ordered the EC to pay both Grail and Illumina’s legal costs in the proceedings. The EC had previously fined Illumina €432m ($478m) in 2022 after the company closed its deal with Grail before the body could sign off on the deal.
It remains to be seen now whether the companies will still pursue a merger, with Illumina still holding on to its minority share of 14.5% in Grail. On 15 August 2024, the US Federal Trade Commission (FTC) similarly dismissed its own investigation blocking the merger on the grounds that it was anti-competitive.
