Merger jurisdiction in EU competition law after Illumina/Grail: What’s next?

1. INTRODUCTION

The Illumina/Grail ruling by the Grand Chamber of the European Court of Justice (ECJ) on 3 September¹ has rejected the Commission’s novel interpretation of Article 22 of the EU Merger Control Regulation² (EUMR) 139/2004. The Commission had used referrals from Member States that were not themselves competent to review this transaction nor to call in the concentration between two American producers of medical devices, one of which (Grail) had no EU turnover whatsoever.

By overturning the General Court’s 2022 ruling that supported the Commission’s approach,³ the ECJ reopened the debate on how to address mergers that fall below jurisdictional thresholds but might still harm competition, such as ‘killer acquisitions’. The judgment highlights a broader issue in EU merger control: while many transactions exceeding the thresholds have minimal competitive relevance, there is no mechanism to scrutinize below-threshold mergers that may pose substantial risks.⁴

The main question we will address in this opinion is that found in the title: what can we expect to happen next as regards the scope for merger jurisdiction in European Union (EU) competition law? We will place our discussion in the context of the recent Draghi Report⁵ and the broader need to re-examine whether EU competition law remains fit for purpose. We start by briefly setting out the judgment, followed by a review of the commentary, our own views on the policy implications at the EU and national levels, and a short conclusion.

2. THE ILLUMINA GRAIL JUDGMENT

The main question: can referral bring all mergers within scope?

Since its inception in 1989,⁶ jurisdiction in EU Merger control has been based on a system of turnover thresholds,⁷ with limited exceptions based on referrals between the EU and the national levels.⁸ The Illumina/Grail case revolved around the interpretation of the following clause in Article 22(1) EUMR on referral to the Commission, which reads:

One or more Member States may request the Commission to examine any concentration as defined in Article 3 that does not have a Community dimension within the meaning of Article 1 but affects trade between Member States and threatens to significantly affect competition within the territory of the Member State or States making the request. Such a request shall be made at most within 15 working days of the date on which the concentration was notified, or if no notification is required, otherwise made known to the Member State concerned.

This is also called the ‘Dutch Clause’, as it was originally introduced at the behest of the Netherlands when this country still lacked a national system of merger control.

The pivotal question, as phrased by Advocate General Emiliou, was whether Article 22 allows Member States without jurisdiction to review a merger under their national laws to refer such cases to the Commission.⁹

The general court’s 2022 affirmative answer

On the face of it, the text of Article 22(1) leaves little doubt that this question should be answered in the affirmative, as it expressly states that ‘any concentration’ can be referred to the Commission. Consistent with the approach required by the CILFIT (1982) case law, the General Court had checked and confirmed this intuition based on a literal analysis by adding a historical, contextual, and teleological analysis.¹⁰ This required referring to the so-called travaux preparatoires of the legislation, as well as choosing which material was deemed relevant for this purpose. The evidence, so the General Court accordingly reasoned, showed that Article 22 aimed to rectify the deficiencies flowing from the rigidity of the turnover threshold.¹¹ Effectively the EUMR created a type of universal jurisdiction for the Commission provided the four substantive conditions of Article 22(1) were fulfilled: (i) a request by one or more Member States; of (ii) a concentration as defined by the Regulation; that (iii) affects trade; and (iv) significantly threatens competition in a Member State.

The ECJ’s 2024 negative answer

The ECJ overturned the General Court’s ruling; however, rejecting this broad interpretation. While agreeing that the text of Article 22 appeared clear, the ECJ emphasized that historical, contextual, and teleological analyses required a narrower reading. The ECJ found no conclusive evidence that Article 22 was intended to act as a corrective mechanism.

Historically, the Dutch Clause was designed to compensate for Member States without merger control regimes, not to address gaps in the EU’s turnover-based system. Largely following its AG, the ECJ found that, precisely on historical, contextual, and teleological grounds, it is necessary to depart from the literal text. To this purpose, dozens of seemingly arcane textual references were interpreted from various perspectives in the context of their purpose and historical intent. The ECJ’s reading thereof is by definition authoritative, and it goes beyond the scope of this opinion to rehearse the long series of rebuttals of the General Court’s position, especially since there were no clinching arguments. But none were needed: to strike down the General Court’s reading, it sufficed to show that there was no clear support for it under any of the alternative analyses. This was a low bar for the ECJ to clear.

As was already mentioned with reference to the Dutch case, historically, the purpose of Article 22 was to allow for merger control by the Commission in countries that did not already have it themselves. It was not intended to serve as a corrective mechanism.¹² Contextually, the ECJ held that referrals normally concerned replacing the exercise of national authority to examine a merger with a test at the EU level, and pointed out that the EUMR provided a simplified procedure with a view to reviewing the thresholds.¹³ The teleological interpretation, in part grounded in the previous two frames, was that the objective had been to allow merger control locally in the absence of a merger control regime and to extend the one-stop-shop principle by allowing the avoidance of multiple notifications at the national level.¹⁴ The ECJ stated that consequently ‘it has not been established that mechanism was intended to remedy deficiencies in the control system inherent in a scheme based principally on turnover threshold, which is, by definition, incapable of covering all potentially problematic concentrations.’¹⁵

It added that the General Court erred in finding ‘that Article 22 constituted a corrective mechanism for the effective control of all concentrations with significant effects on the structure of competition in the European Union.’ This led to the conclusion that the interpretation of Article 22 as advocated by the Commission and endorsed by the General Court upset the balance that Regulation 139/2004 had established between potentially conflicting goals: (i) establishing a system of control of concentrations that are potentially harmful to competition; (ii) a clear allocation of power between the Commission and the national competition authorities (NCAs); and (iii) an effective and predictable system of ex ante control for concentrations. It is the balancing of these objectives that the ECJ seems to consider of overriding importance,¹⁶ and which it finds absent in the reasoning of the Commission and General Court.

Moreover, the Commission had favoured an unorthodox review of its interpretation of Article 22 over the use of a legislative instrument specifically designed for this purpose. Accordingly, it is the principle of institutional balance that seems to ultimately sway the ECJ, which successively points out that if some transactions capable of significantly affecting competition remain unscrutinized, ‘it is for the EU legislature to review those thresholds or to provide for a safeguard mechanism enabling the Commission to scrutinize such a transaction’, and that ‘it is open to the Member States to revise downwards their own thresholds determining competence based on turnover as laid down by national legislation’.¹⁷

The ECJ thus rejected the Commission’s expansive interpretation of Article 22, but not before remarkably pointing out that the EUMR is part of a system of competition law that also includes Articles 101 and 102 TFEU and referring to its Towercast Judgment of 2023¹⁸ to argue that Regulation 139/2004 cannot stand in the way of national procedures controlling concentrations that lack an EU dimension from being tackled based on Article 102 TFEU.

3. COMMENTARY AND DEBATE

Almost immediately, the judgment of the ECJ ignited widespread discussion about its impact on EU merger control and the Commission’s capacity to address ‘killer acquisitions’ effectively.¹⁹ The judgment is widely regarded as a double-edged sword. On the one hand, it reinstates a degree of predictability and legal certainty for businesses by limiting the Commission’s ability to assume jurisdiction over transactions referred by non-competent Member States.²⁰

On the other hand, the judgment narrows the avenues available to tackle mergers that may harm competition despite falling below existing thresholds. This enforcement gap—the Commission’s unsuccessful attempt to interpret Article 22 EUMR as a corrective mechanism—remains a pressing issue. Observers note that businesses and regulators alike face the prospect of continued uncertainty as the Commission explores alternative tools to address this gap.²¹

The ECJ emphasized that referrals require national competence, but some argue that this reading undermines the broader objectives outlined in the EUMR, such as subsidiarity and efficiency.²² For example, the ability of non-competent Member States to join referral requests could theoretically enhance systemic coherence by ensuring a one-stop review for transactions with EU-wide implications. The ECJ’s approach instead prioritizes rigid procedural consistency, a choice that some critics find shortsighted.²³

Several pathways for addressing below-threshold mergers have emerged in the debate, reflecting the complex trade-offs between efficiency, legal certainty, and enforcement objectives.

Legislative amendment

Amending the EUMR to lower thresholds or introduce qualitative criteria for referrals is often cited as a potential solution. However, this approach faces significant political and procedural hurdles, particularly in light of fears that reopening the EUMR might spark broader debates on industrial policy and the role of European Champions. Commentators have noted that such legislative revisions would also need to preserve the predictability and efficiency of EU merger control, further complicating efforts to reach consensus.²⁴

Expanded NCA jurisdiction

The jurisdictional problem could perhaps be addressed by more Member States introducing (i) transaction value, (ii) market share-based jurisdictional tests, or (iii) empowering their NCAs to call in below-threshold mergers. This strategy, already hinted at by the Commission, would require Member States to expand their jurisdiction (reliance on a ‘coalition of the willing’²⁵). Although Member States could expand their own jurisdiction through any of these three routes or a combination of them (and some have started doing so), this again raises issues with the requirements of efficiency, foreseeability, and legal certainty.

It has been pointed out that those NCAs which have jurisdiction and the Commission might be flooded with proactive merger filings by those attempting to anticipate investigations that could culminate in divestiture orders, requiring significant resources for the NCA or Commission to manage.²⁶ Critics also warn that expanded call-in mechanisms might conflict with the one-stop-shop principle and create administrative burdens, potentially undermining efficiency and predictability for businesses.²⁷ This, however, ignores the option for undertakings that have to notify in three or more Member States to request referral to the Commission under Article 4(5) EUMR.

Towercast and Article 102 TFEU

The ECJ’s reference to the Towercast judgment highlights the potential for using Article 102 TFEU to address anti-competitive mergers involving dominant firms. However, commentators so far agree that this tool is of limited use, as it applies only to cases involving pre-existing dominance and operates as an ex-post enforcement mechanism.²⁸ This reactive approach offers less predictability for businesses and does little to address the proactive oversight needed for effective merger control.

Implications for the Digital Markets Act

The judgment also has implications for Article 14 Digital Markets Act (DMA),²⁹ which requires gatekeepers to notify all mergers, where the merging entities or the target of concentration provide core platform services or any other services in the digital sector or enable the collection of data, to the Commission. Following the ruling, Member States without jurisdiction over a transaction can no longer refer such cases to the Commission. This creates potential enforcement gaps for mergers that would otherwise have been flagged under the DMA, prompting further questions about the consistency and completeness of the regulatory framework.³⁰

By setting the stage for these debates, the Illumina/Grail ruling serves as both a challenge and an opportunity for policymakers. The subsequent section will focus on the implications of this ruling for EU and national policy, exploring potential reforms and their broader context within European competition law.

4. POLICY IMPLICATIONS AT THE EU AND NATIONAL LEVELS

This raises the question of what could and should now be done about below-threshold mergers. At least three different arguments were already identified by the ECJ in Illumina/Grail: one concerning the Commission level (but requiring Member State support) and two relying exclusively on the Member States.

The EU route

First, the EU legislature can adapt the EUMR either as part of a bespoke procedure focused on thresholds only or as part of a larger process of revision of the Regulation as a whole. The risks of the latter to the Commission’s power and independence are most likely so considerable that it would rather not hazard this course. But it cannot be excluded that the suggestions for revamping competition found in the September 2024 Draghi Report could lead us in this direction under the second von der Leyen Commission.

As regards the former, revision of the thresholds set out in Article 1 EUMR only, Article 1(4) and (5) of the EUMR state:

On the basis of statistical data that may be regularly provided by the Member States, the Commission shall report to the Council on the operation of the thresholds and criteria set out in paragraphs 2 and 3 by 1 July 2009 and may present proposals pursuant to paragraph 5.

Following the report referred to in paragraph 4 and on a proposal from the Commission, the Council, acting by a qualified majority, may revise the thresholds and criteria mentioned in paragraph 3.

This route would mean revising the EUMR by lowering these thresholds or introducing qualitative criteria for referrals on this basis. Article 1(4) and (5) of the EUMR provide a streamlined mechanism for adjusting thresholds, which could avoid the lengthy and politically fraught process of comprehensive legislative amendment.

Beyond lowering the turnover thresholds, this could also include introducing a transaction value or market share-based test, or a qualitative call-in power requiring mergers of concern to be notified irrespective of their turnover. All three could lead to a pivot towards focusing more on substantively significant cases that significantly affect competition, in an extension of the simplification of merger control procedures introduced in May 2023.³¹ Arguably, however, this would also amount to a redistribution of competence between the Commission and the Member States that would require decision-making based on the standard unanimity rule for modifications of the EUMR. In any event, instead of being lowered, thresholds could also be raised in line with inflation to focus on more significant cases.

The national routes

Secondly, Member States could revise their jurisdictional criteria and/or thresholds to allow more mergers to be caught and consequently potentially subject to referral under Article 22. In part such measures already exist. For example, Germany and Austria have already introduced transaction value thresholds,³² and several Southern Member States have a system based on market share thresholds as alternative jurisdictional criteria.

Arguably, it would be most effective if more Member States introduced qualitative call-in powers (such as already exist in Ireland, Denmark, Italy, Hungary, Latvia, Lithuania, Slovenia, and Sweden³³), similar to the system of voluntary notification that has long been the standard system in the UK without giving rise to credible claims of overreach or legal uncertainty. In October 2024, the Commission accepted the first Article 22 reference following the Illumina/Grail judgment, based on the Italian call-in powers.³⁴

Other Member States are contemplating this approach, such as the Netherlands, albeit so far primarily inspired by the perceived need to control roll-up and killer acquisitions within its own borders, for instance, by private equity in the healthcare, accountancy, and childcare sectors. This might also be combined with raising the national turnover thresholds in line with inflation, to allow the available resources to focus on the most egregious cases. A drawback of this approach, from an integration and internal market perspective, is that it leaves the initiative wholly with the Member States, even if the problems concerned have an EU dimension, although of course the Article 4(5) and 22 EUMR referral routes remain available to protect the uniformity and predictability of EU competition law.

The third and final route indicated by the ECJ is also found at the national level: it consists of extending the abovementioned Towercast approach. The ECJ’s reference to the Towercast judgment suggests that Article 102 TFEU could fill enforcement gaps for transactions involving dominant firms. However, this tool is ex-post, limited in scope, and lacks the proactive oversight of merger control. Its practical utility remains minimal for addressing killer acquisitions.³⁵

Broader context and the Draghi report

The clear implication of all three of these alternative routes is not only that the ball now appears to be firmly in the court of the Member States, but that as a result, in the absence of new legislation, we may be confronted with solutions that are neither uniform nor effective. The further policy implication at the EU and national levels is that clear thinking and coalition-building will be necessary to devise a coherent approach, which can no longer rely on the shortcut of a Commission interpretative notice, as in Illumina/Grail. Initially, one might think this reflects a tendency to draw back from further integration in the absence of a clear political mandate at the national level.

Yet, this may be a misconception. The broader EU context is currently that of the Draghi Report, which seeks to enhance the impact of competition law in promoting European competitiveness, calling inter alia for a new approach to innovation and looking at European markets for telecommunications mergers to strengthen European industry. Draghi also calls for a New Competition Tool (a horizontal instrument initially mooted in 2021, when priority was given to the sectoral DMA) to complement the Commission’s toolbox where structural problems that cannot be tackled effectively with existing instruments are involved. Clearly, killer and roll-up acquisitions are not far removed from such more industrial and competitiveness policy-related considerations.

In this broader context, the debate over EU merger control reform intersects with discussions on industrial policy, digital markets, and regulatory frameworks for innovation. The next phase of reform must balance these competing priorities, ensuring that competition policy remains effective while supporting Europe’s broader strategic objectives.

5. CONCLUSION

The ECJ ruling in Illumina/Grail is a watershed moment for EU merger control. By rejecting the Commission’s broad interpretation of Article 22, the ECJ has clarified jurisdictional boundaries while leaving a gap in enforcement. In principle, there is a case for refocusing concentration control on the most egregious cases, including where these are not reflected in turnover. This may require the introduction of more qualitative criteria. It is not yet clear if there is support for a revision of the threshold by legislative means, even though a fast-track route exists. The national routes envisaged by the ECJ itself may not lead to uniform or effective solutions. In any event, it is likely that the process of reviewing the merger jurisdiction of the Commission will come to form part of a larger rebalancing of European competition law and its toolkit.

Acknowledgements

This article was written in a personal capacity. We are grateful for comments from Martijn Snoep and research assistance by Emma Hoogland.

Footnotes