On April 1, 2021 the Conseil d’Etat ruled that it lacks jurisdiction to review a French Competition Authority (“FCA”) decision referring a contemplated merger to the European Commission (“Commission”) under Article 22 of the EU Merger Regulation (“EUMR”).
On September 20, 2020, Illumina, a leading global gene sequencing company based in the US, announced the €5.9 billion acquisition of Grail, a US-based biotechnology start-up which develops blood tests that use DNA sequencing to identify early-stage cancers. Illumina founded Grail in 2016 and owns 14.5% of the company. The proposed transaction involves the acquisition by Illumina of full control over Grail. Unlike Illumina, Grail has no EU sales. The transaction therefore does not meet EU or national merger control thresholds.
Under Article 22(1) EUMR, a national competition authority (“NCA”) can refer a concentration to the Commission—even if it falls below the national thresholds—if two conditions are met: the concentration must (i) “affect trade between Member States” and (ii) “threaten to significantly affect competition within the territory of the Member State or States making the request”. Under Article 22(5) EUMR, the Commission may inform one or several Member States that it considers a concentration fulfils the conditions and invite those States to make a request of referral. In either case, the NCA may refer a case within 15 working days of the date on which the concentration was notified or, if notification is not required, within 15 working days of the date on which the concentration is “made known” to it. In September 2020, Commissioner Vestager announced that the Commission would welcome referrals of mergers that fall below national thresholds but which could harm competition, in particular killer acquisitions in the digital and pharmaceutical industries. The Commission published guidelines for national authorities in March.
In the present case, the Commission invited Member States to request a referral of the Illumina/Grail transaction on February 19. The FCA’s President submitted a request for referral on March 9, considering that Illumina could make access to its next-generation gene sequencers more complex for Grail’s competitors post-transaction. Enforcers in five other countries joined the request (Belgium, Greece, Iceland, the Netherlands, and Norway).
On March 19 and 29, Illumina and Grail respectively filed an application to suspend the FCA’s referral request before the Conseil d’État.
The Conseil d’Etat’s ruling
Illumina and Grail argued that the FCA’s decision was procedurally flawed because (i) the FCA’s President lacked jurisdiction to refer the merger to the Commission; (ii) the parties had not been consulted or given an opportunity to express their views prior to the referral; and (iii) the FCA’s request had exceeded the statutory limit, because the 15-day period under Article 22 had begun to run when the acquisition was announced in September 2020. The parties also alleged that the FCA’s decision was substantively wrong because of factual mistakes regarding Grail’s activities and the transaction’s alleged anticompetitive effects.
The parties finally argued that the FCA’s decision violated the principle of legal certainty, because the newly interpreted Article 22(1) procedure may only be used in the event of clear and particularly serious anticompetitive effects, not only potential ones. In turn, the FCA argued that the application for interim relief should be rejected, mainly because the Conseil d’Etat lacked jurisdiction.
On April 1, the Conseil d’Etat dismissed Illumina and Grail’s appeals. It considered that the FCA’s referral request could not be separated from the review conducted by the Commission, which is placed under the Court of Justice of the European Union’s sole control (“CJEU”). Thus, regardless of the effects of a request on parties, the administrative judge is not competent to hear an objection to such a request. The Conseil d’Etat did not address any of the legal issues raised by the parties on the merits.
On April 20, the Commission accepted to review the merger. As a result, Illumina and Grail will not be able to close the transaction for months, if not over a year. On April 28, Illumina filed an action for annulment of the Commission’s decision before the General Court, arguing essentially that this unprecedented use of Article 22(1) leaves companies uncertain as to how the EUMR will be applied.
The Illumina/Grail case heralds a major shift in merger control enforcement in Europe. Subject to the parties’ appeal before the General Court, it will be the first instance where the Commission reviews a merger that falls below both the EU and national thresholds. The Conseil d’Etat decision means that, subject to the General Court’s decision, if a merger is referred to the Commission, the parties will have to wait for the Commission’s decision on the merger to challenge the referral. However, the EU judges’ decision will have few practical implications for the parties, since they would have already suspended their merger plans and undergone a lengthy merger review.
It remains to be seen if the General Court will clarify the boundaries of Article 22(1), in particular regarding (i) the standard of anticompetitive effects required and (ii) the deadline for a referral.
 Conseil d’Etat ruling no. 450878 of April 1, 2021, and Council Regulation (EC) No 139/2004 of January 20, 2004 on the control of concentrations between undertakings.
 See Communication from the Commission, Guidance on the application of the referral mechanism set out in Article 22 of the Merger Regulation to certain categories of cases, March 26, 2021, C(2021) 1959 final.
 Similarly, on March 31, the US Federal Trade Commission announced its decision to submit a request to the relevant US Court to block this deal, considering that, as a result of the transaction, Illumina would be in a position to prevent or delay the development of products competing with those of Grail.
 In March 2020, a Dutch provisional-relief judge also rejected the parties’ request to prohibit the Netherlands from joining France’s referral request.
 See the Commission’s press release of April 20, 2021, available at: https://ec.europa.eu/commission/presscorner/detail/en/mex_21_1846.
 EU General Court, Illumina v Commission¸ Case T-227/21, action for annulment lodged on April 28, 2021. See also Illumina’s press release of April 29, 2021: https://www.illumina.com/company/news-center/press-releases/press-release-details.html?newsid=e2c75c6a-6cbe-4e45-b8a6-6d90d40c253e.