Introduction

In a pivotal development, Advocate General (AG) Nicholas Emiliou has delivered a critical opinion on the European Commission’s (EC) strategy for reviewing potential “killer acquisitions” that may otherwise evade formal scrutiny.

The EC changed its approach to Article 22 of the EU Merger Regulation 139/2004 (EUMR, Merger Regulation) back in 2021, when it also issued guidelines on the new referral policy. Whereas the EC had previously discouraged national competition authorities (NCAs) from referring deals to the EC when they did not meet the national merger control thresholds, it now encourages them to do so in specific cases. This policy shift has been met with concern from some of the member state NCAs as well as the business and legal communities, both due to legal considerations and its potential to significantly extend the EC’s jurisdiction and disrupt the predictability of the EU’s merger control system. On the other hand, it was welcomed—and followed—by other member state NCAs. This novel approach was approved by the General Court (GC) in the Illumina/Grail case in mid-2022 (see our previous alert here).

The AG’s opinion

In the AG’s opinion, issued on March 21, 2024 on the Illumina/Grail case, he meticulously dissects and challenges the EC’s and the GC’s interpretation of Article 22 EUMR.

He found that, according to the provision’s wording, its origin, context and purpose—as well as the EU’s merger control system and key fundamental principles of EU law—the EC may only investigate NCA referrals if that referring authority also has competency to investigate. The opinion contends that the new interpretation and the GC’s assessment of Article 22 EUMR significantly extends the scope of the bloc’s merger control system and the EC’s jurisdiction. It would empower the EC to review mergers globally at any time (even post-closing), irrespective of the companies’ turnovers, presence in the EU or the deal’s value. In the AG’s view, the new interpretation also raises procedural issues as it “would hardly be efficient, predictable and capable of ensuring legal certainty to the parties.”

The AG therefore suggested that the CJEU set aside the GC’s judgment and annul the EC’s decisions on the referral request in the Illumina/Grail case.

Outlook

It now remains for the CJEU to finally decide on the matter. It generally tends to follow the (non-binding) opinions of AGs. However, this is not a given—we have seen at least one recent instance (see our previous alert on the Superleague case) where it did not do so.

Should the CJEU follow the AG’s opinion, this would have significant consequences for the EC’s merger control enforcement. The EC could no longer invoke Article 22 EUMR to get jurisdiction over alleged “killer acquisitions” that do not meet merger control thresholds, including those that were reported to it by gatekeepers under the Digital Markets Act. The EC and NCAs might then be more inclined to rely on the Towercast decision, which allows below-threshold mergers to be reviewed ex-post (i.e., even after they have been completed) where anti-competitive effects have been observed in cases of dominant undertakings (see our previous alert here).

As the AG’s opinion is non-binding, there is a remaining risk that below-threshold mergers could be referred. Companies should therefore continue to thoroughly assess any referral risks and, if so, make contingency plans for the time and expense a referral would take, including potentially consulting with regulators (as suggested by the EC). This applies not only in the digital and pharmaceutical spaces but also in other sectors.