Illumina accuses EU of over-extending its powers in assessing Grail deal

By Foo Yun Chee

LUXEMBOURG (Reuters) -Illumina on Tuesday accused EU antitrust regulators of over-extending their powers in their scrutiny of its $7.1 billion for Grail while regulators accused the U.S. life sciences company of seeking to rewrite the EU merger rule book.

The case underlines the European Commission’s determination to apply a rarely used power called Article 22 to examine deals by large companies that may aim to shut down smaller rivals, even if the deals are below the EU merger revenue threshold.

The tougher EU regulatory approach however has triggered concerns among companies about legal uncertainty and start-ups looking for a buyout from bigger rivals.

Illumina took its fight to the Court of Justice of the European Union (CJEU) after it lost its challenge at a lower tribunal last year against the EU competition authority’s 2021 decision to review the deal that it subsequently blocked.

“Does the EU merger regulation confer on the Commission the power to control mergers which fall below both the thresholds set out in the merger regulation…? We say the answer is clearly no, it does not,” Illumina lawyer Daniel Beard said before the panel of 15 judges.

“Article 22 is a derogation, not a catch-all. It is to be construed strictly,” he said.

Commission lawyer Nicholas Khan dismissed Illumina’s arguments.

“Ilumina and Grail’s arguments are… essentially a policy manifesto about what they think should be the jurisdictional limits of EU merger control,” he said.

“Illumina’s arguments are simply a demand to rewrite the merger regulations.”

CJEU Advocate General Nicholas Emiliou will deliver a non-binding opinion on March 21. The Court, which follows the majority of such recommendations, will rule in about six months.

If it loses its appeal, Illumina, which closed the deal prior to the EU veto, has said it will divest Grail within a year.

The Commission is set to review U.S. chipmaker Qualcomm’s bid for Israeli firm Autotalks and the Deutsche Boerse-owned European Energy Exchange’s (EEX) acquisition of Nasdaq’s European power trading and clearing business using its Article 22 power.

The cases are C-611/22 P and C-625/22 P Grail v Commission and Illumina.

(Reporting by Foo Yun Chee; editing by Jan Harvey and Jason Neely)