Illumina’s legal victory against the European Union’s antitrust enforcer won’t give the testing company back its $7.1 billion merger with Grail. But it might dampen the bloc’s more aggressive antitrust approach.
A top European court on Tuesday sided with Illumina’s antitrust appeal, meaning the company won’t have to pay a $472 million fine imposed by the European Commission. But the court’s decision also comes with larger implications for merging companies: By challenging the deal, the commission had raised fears that more transactions, even ones without a European footprint, could encounter antitrust reviews.
Illumina and Grail are based in the US, and in 2020 when the companies struck their deal, Grail had no revenue in Europe. The commission probed the buyout despite being under its review threshold after a request from member states who argued that the merger could stifle competition in the cancer testing market.
Tuesday’s ruling from the European Court of Justice said that the commission was wrong to base the antitrust case on the referrals.
“The commission is not authorised to encourage or accept referrals of proposed concentrations without a European dimension from national competition authorities where those authorities are not competent to examine those proposed concentrations under their own national law,” the court said.
The decision could, at least temporarily, limit the European Union’s oversight over so-called killer acquisitions, in which a large company buys a small competitor to snuff out competition, said Lisl Dunlop, a partner at Axinn, Veltrop & Harkrider, who works on antitrust issues.
“The [European Court of Justice] decision signals more limited scope for review of those transactions,” she said.
But Dunlop said the regulator could also change its rules to allow for the review of such cases — and the commission signaled as much in a statement after the ruling.
Margrethe Vestager“We will consider the next steps to ensure that the Commission is able to review those few cases where a deal would have an impact in Europe but does not otherwise meet the EU notification thresholds,” EU competition chief Margrethe Vestager said.
“US tech and healthcare deals aren’t out of the woods completely,” Dunlop said.
Likewise, Kasia Czapracka, a partner with law firm White & Case, said even with today’s court decision antitrust regulators are still likely to take a broad antitrust view.
“This does not mean that we will go back to the times where merger filings could be excluded simply based on target’s revenues and assets. All deals, but particularly those in the life sciences and digital sectors, will continue to require a holistic analysis of potential antitrust risks,” she said.
The Federal Trade Commission also objected to Illumina’s takeover of Grail, but Illumina said it wouldn’t pursue further appeals. In June, Grail began trading as a separate company after being formally spun off from Illumina.