On 3 September 2024 the CJEU’s judgment set aside the judgment of the General Court and annulled the Commission's decisions to examine the proposed acquisition of GRAIL by Illumina. The Court found that the Commission is not authorised to accept requests from national competition authorities seeking the review of proposed transactions falling below both EU and national thresholds.
We were pleased to read that the Court heeded the opinion of Advocate General Emiliou that "the importance of predictability and legal certainty, in particular for merging parties, cannot be overemphasised" and has chosen not to endorse a policy where the need for effective control would come at the expense of these guarantees.
Potential alternative merger control enforcement?
In our previous update, we reflected on the potential outcomes and future scenarios for EU and national merger control policies. While our bet on the CJEU limiting the extended scope of the Commission's jurisdiction under Article 22 turned out to be well placed, we remain concerned about potential alternative (and creative) merger control enforcement. The court’s press release was swiftly followed by statements from various competition authorities, expressing their commitment to continue find ways to tackle transactions (potentially) harmful to competition that (currently) escape an ex ante merger control review.
Use of existing instruments
In its press release, the French competition authority commits “to carefully examine the Court of Justice's judgment and determine the existing or necessary tools to ensure that no merger, including those that are not subject to prior notification, would harm competition on the French territory” and expresses its intent “to make full use of the existing instruments, whether based on Articles 101 and 102 of the Treaty on the Functioning of the European Union or on equivalent provisions under national law.”
Possibilities for referrals
In her statement on the judgment, Executive Vice-President Margrethe Vestager even seemingly shrugs when pointing out that "In the last few years, several member states have introduced provisions allowing them to request the notification of transactions that do not meet national thresholds, in situations where they might have a significant competitive impact. The possibilities for referrals to the Commission under Article 22, in compliance with today's judgment are thus already more extensive than they were at the time of the Illumina/GRAIL referral."
We are curious to see how the National Competition Authorities will take this further!
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Consequences of room for creativity – NCAs providing a glimpse of the future?
A look at recent decision practice at the national level illustrates the variety of scenarios undertakings will have to consider.
- The Belgian Competition Authority (BMA) was the first NCA to apply the Towercast judgment and assess a merger ex post under Article 102 TFEU. In March 2023, the BMA opened an ex officio investigation into the takeover of EDPnet's assets by Proximus, as ordered by the Ghent Enterprise Court in the context of a judicial reorganisation procedure. Three months later, the BMA found a prima facie case of abuse of a dominant position and imposed interim measures to ensure the viability and value of EDPnet. In November 2023, Proximus divested EDPnet to Citymesh, a new telecoms entrant, which had appealed against the decision of the Enterprise Court.
- In May 2024, the French Competition Authority (AdlC) published its decision extending the scope of the Towercast judgment to Article 101 TFEU. The decision concerned the exchange of business assets between three rendering companies, which qualified as merger transactions. The AdlC found the necessary basis in the Towercast judgment for the assessment of merger transactions under Article 101 TFEU, provided that they do not exceed any merger control threshold and do not give rise to a referral under Article 22. The AdlC did not find an infringement by effect (which was not possible on the basis of the lack of information in the file), and thus did not provide any guidance for future assessments under Article 101 TFEU. However, we hope that the AdlC's finding that the merger transactions did not constitute an infringement by object will also be the rule for future assessments.
- The Dutch Competition Authority (ACM) takes a more 'structural' approach. It considers an extension of its merger review powers necessary, in particular to capture two type of small acquisitions which according to the ACM may lead to competition concerns: the killer acquisitions and the so-called 'bead stringing' acquisitions, i.e. where a major player acquires smaller competitors one by one (see, for example, a blog by ACM Chairman Martijn Snoep and the recent preliminary application of the ‘bead stringing’ theory of harm in a concentration referred to Phase II). The ACM has put forward several options for extending its jurisdiction to review concentrations, ranging from lowering the turnover thresholds to establishing a so-called 'call-in power', whereby the ACM can 'call-in' a small acquisition within a certain period of time by indicating that it wishes to assess that acquisition under the regular procedure. The ACM is currently discussing potential solutions with the Ministry of Economic Affairs and practitioners. There are rumours that a potential amendment to the competition law is being drawn up which would give the ACM this 'call-in' power.
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How we can help
At NautaDutilh, we understand the importance of navigating the complex landscape of competition law when it comes to joint ventures, mergers, acquisitions and other cooperations. Our team is well versed in EU and national competition law across a wide range of sectors, allowing us to provide comprehensive and practical advice to our clients.