Illumina/Grail: AG Emiliou’s opinion on referrals under the EU Merger Regulation

28 March 2024

Advocate General Emiliou challenges the Commission and General Court’s position on referrals from Member States to the Commission under the EU Merger Regulation, stirring discussions on jurisdictional boundaries and regulatory balance within the EU.


The Court of Justice of the European Union (CJEU) is due to rule on a landmark case concerning the scope of the European Commission’s merger control powers under the EU Merger Regulation (EUMR). The case hinges on whether the Commission can validly accept a referral request from a Member State and review concentrations under Article 22 EUMR, which enables Member States to ask the Commission to examine concentrations that do not satisfy the EUMR turnover thresholds but that affect trade between Member States and threaten to significantly affect competition within the territory of the relevant Member State, where that merger falls below the national thresholds of the Member States making the request.

Advocate General (AG) Emiliou delivered his Opinion in the case on 21 March 2024. His Opinion criticises the General Court for endorsing the Commission’s interpretation of Article 22 in its judgment. He argues that this interpretation undermines the objectives, principles and coherence of the EU system of merger control, as well as merging parties’ right to legal certainty.

The AG challenges the reasoning and conclusions of the General Court (and thereby the Commission’s own interpretation of Article 22), in particular arguing that the Court relied on a narrow textual interpretation, conducted an incomplete assessment of relevant historical documents, did not properly take account of the original legislative intent of Article 22, and disregarded the balance of competences between the EU and Member States. The AG advocates for a more restrained approach to Article 22 that respects the institutional balance and territoriality principles of EU law and minimizes the potential for duplication and fragmentation of merger control within the EU.

The heart of the controversy

The underlying case relates to a Commission decision to accept a referral request from the French Competition Authority to review the proposed acquisition by Illumina of Grail, a nascent healthcare company developing cancer detection tests which generated no turnover in the EU and therefore did not meet the EUMR turnover thresholds or fall within scope of any Member State’s merger control regime.

This move represented a significant departure from the Commission’s previous use of Article 22 and raised important questions about jurisdictional boundaries and the principle of subsidiarity within the EU. For further context and commentary on this case, please see our previous article and blog.

Interpreting Article 22: AG Emiliou’s stance

In his opinion the AG challenges the General Court’s interpretation of Article 22, which he argues is a narrow and supplementary tool that supports, not supplants, Member States’ powers of review over mergers that do not meet the EUMR turnover thresholds. The AG rejects the General Court’s view that Article 22 is a flexible and discretionary instrument that the Commission and Member States can employ to address any transaction of concern.

To reach this conclusion, the AG assesses the various methods of interpretation applied by the General Court to Article 22, which led the General Court to conclude that Member States may ask the Commission to examine a concentration that does not have a Community dimension, even if they have no competence to undertake their own review under national law. We examine each of these methods of interpretation in turn to explore the AG’s findings.

A literal interpretation

First, the AG argues that a textual interpretation of Article 22 does not, as the General Court suggested, lead to the conclusion that Member States can refer mergers that fall below their national thresholds.

  • The AG acknowledges that the wording of the provision is broad and does not exclude such referrals, but also argues that it does not expressly allow them either. He criticises the Commission for having relied solely on the text of the provision and ignoring the context and the objectives of the EU merger control system. In doing so, he notes that the CJEU’s case-law has consistently used other methods of interpretation to clarify the meaning of EU legislation.
  • The AG also identifies two textual elements that cast doubt on the Commission’s interpretation.
    • The title of the provision (Referral to the Commission), as Member States should logically only be able to refer cases that are under their jurisdiction: “the term corresponding to ‘referral’, in the vast majority of the language versions, has a specific connotation. Indeed, it suggests that the provision concerns, in principle, cases that are actually or potentially before the national authorities and are then referred (that is, passed on, transferred, handed over, assigned, etc.) to the Commission. That interpretation would be in line with the legal maxim nemo dat quod non habet (no one can give what they do not have)”.
    • The provision is explicitly conditional on the merger threatening to affect competition “within the territory of the Member State or States” making the request, which undermines the notion that it is meant as a corrective mechanism to address competition problems at the EU level.

The AG concludes (as ultimately the General Court did) that the text of the provision itself is not sufficiently clear to resolve the question, and that other methods of interpretation are needed.

A historical interpretation

Second, the AG argues that a historical interpretation should not lead the CJEU to conclude that Article 22 allows Member States to refer a concentration to the Commission where it falls below national thresholds. To this end, the AG highlights four major reservations over the General Court’s assessment:

  • according to the AG, the General Court relied on documents of limited value, as they are all authored by the Commission, post-date the adoption of the original ECMR in 1989, and do not reflect the views of the European Council (which acted as sole legislature for the EUMR) or the legislative process;
  • the AG argues that the passages cited by the General Court are irrelevant to the issue in dispute, since nothing in the findings of the General Court “illuminates, directly or indirectly, the question at the heart of the present ground of appeal”;
  • moreover, the documents that the General Court relied on, when read in their entirety, contradict its findings, as they show that the provision was originally intended to enable the referral of mergers by Member States that lacked a merger control system, and that subsequent amendments to the provision aimed to avoid multiple filings and strengthen the one-stop-shop principle; and
  • finally, the AG points out that the General Court failed to consider other relevant documents, such as the travaux préparatoires (preparatory papers), which confirm that the provision was not meant to fill the gaps in the national merger control systems and that the Commission itself did not consistently interpret the provision as broadly as it now claims.

A contextual interpretation

Third, the AG argues that an examination of other relevant provisions of the EUMR supports the conclusion that the General Court erred in finding that Article 22 allows Member States to refer a merger that falls outside the scope of their merger control regimes to the Commission.

  • The General Court failed to consider the evolution of the provisions and recitals of the EUMR, which suggest that the referral mechanism was not intended to cover mergers that are not notified or notifiable at the national level and were instead included with the EUMR’s one-stop-shop objective in mind.
  • The Opinion also argues that the General Court overlooked other aspects of the EUMR’s evolution, which suggests that the referral mechanism was designed to complement the turnover thresholds of the EUMR, and not to catch potentially harmful concentrations that fall outside the scope of any national merger control system.

A teleological interpretation

Finally, the AG undertakes a “teleological” interpretation of the provision (i.e., considering its purpose within the broader context of EU law) and concludes that this would also not lead to the finding that Article 22 allows Member States to refer a merger that falls below their national merger control threshold to the Commission.

  • The General Court misread certain recitals of the EUMR by finding in them a gap-filling objective for Article 22 EUMR. Rather, these recitals reflect the notion that referrals to the Commission are intended to act as a corrective mechanism for the problem of multiple filings for mergers that meet several national thresholds.
  • The General Court ignored or misread other recitals of the EUMR concerning the effectiveness of the merger control system, the precise allocation of competences between the Commission and the national authorities, the principle of subsidiarity, legal certainty and predictability for the undertakings concerned, and the need for speed and sound administration. These objectives and the balance between them are essential for the proper functioning of the EUMR and cannot be sacrificed for the sake of catching potentially harmful mergers that escape both the EUMR and national thresholds.
  • The AG criticises the General Court’s interpretation of Article 22 EUMR as creating a “competence sandwich”, with the Commission examining larger mergers, national authorities examining those below EUMR but above national thresholds, and the Commission examining mergers below national thresholds. As well as appearing contrary to the logic of subsidiary, this would introduce a far-reaching exception to the one-stop-shop principle which would result in inefficient, unpredictable and uncertain procedures for merging parties. The Opinion also points to various absurdities flowing from the Commission and General Court’s position, including the practical difficulties involved in informally notifying an otherwise non-notifiable transaction to 30 national authorities in order to trigger the 15-working-day time limit for referral requests (and thereby obtain certainty over whether the transaction will be reviewed by the Commission), where there is inadequate clarity as to the information, language and analysis requirements of such quasi-notifications.

Other considerations

In addition to matters of legislative interpretation, the AG argues that the General Court’s interpretation of Article 22 raises a number of systemic issues when account is taken of various general principles of EU law. In particular, under that interpretation, virtually any merger – occurring anywhere in the world, regardless of its value and the parties’ presence or turnover in the EU, and at any time, including well after completion – is potentially subject to the Commission’s scrutiny. In the AG’s view this position is liable to conflict with the principles of institutional balance amongst EU institutions, territoriality of EU law, international comity, equality, proportionality, effectiveness, and the established principle of interpretation according to which exceptions to the general scheme of rules of a legal instrument are to be interpreted strictly.

Conclusion and outlook

If followed by the CJEU, the AG’s Opinion would have significant consequences for EU merger control. The Commission has placed significant weight on Article 22 in recent years as a means to review deals involving pipeline products (especially in the digital and healthcare industries) that would not meet the EUMR turnover thresholds. These efforts would be significantly hampered if the CJEU were to follow the Opinion.

The consequences for Illumina would also be significant, despite it having decided to divest Grail after the merger was prohibited by the Commission in 2022 and the FTC’s attempts to block the deal were largely upheld by a US appeal court. Illumina is pursuing various other appeals against the Commission in respect of its handling of the merger, including in respect of the record penalty imposed on Illumina for gun-jumping. Should the CJEU side with Illumina in respect of the Article 22 reference, the legal basis for the Commission’s measures against Illumina would fall away. There may also be implications for other cases that were referred under the Commission’s new policy of encouraging Article 22 referrals of deals from national competition authorities (for example in Qualcomm/Autotalks and EEX/Nasdaq Power).

Finally, it bears emphasis that the Opinion in this case remains non-binding. As the CJEU considers the Opinion and the merits of the arguments put to it by the parties, legal practitioners and businesses alike should continue to adopt a cautious approach when assessing merger control risk in their transactions. Since the Illumina/Grail transaction was originally called in, Article 22 references have become a material part of the Commission’s merger toolkit, and it remains to be seen whether that will change ahead of the CJEU’s final word in this saga.