In order to prevent companies from creating excessively strong market positions, mergers are subject to the authorisation of the Autorité de la concurrence when the total worldwide sales of all the companies involved exceed €150 million and the total sales in France of at least two of the companies involved exceed €50 million. Above a certain size, the European Commission has jurisdiction.
In recent years, and in particular with the development of digital technology, competition authorities have gradually come to realise that this framework has certain limitations. In particular, it appeared that certain transactions involving highly innovative emerging players could escape their control, given the low level of revenues of the target company. This “blind spot” in regulation, which opens the possibility for a dominant company to buy up its various smaller competitors without a prior examination, can be problematic from the perspective of the competitive dynamics of markets and maintaining incentives to innovate.
The Autorité has proposed remedying this shortcoming on various occasions, without affecting current legislation, by using the referral mechanism provided for in Article 22 of Regulation No. 139/2004. It therefore welcomed the European Commission’s announcement in 2020 that it would now be possible for national competition authorities to refer sensitive mergers to it for review, even when they do not meet the criteria for examination at the national level.
Shortly after this announcement, this new approach was put into practice for the first time, with the Commission’s decision to open proceedings to examine the takeover of Grail by Illumina, following a referral request by the Autorité de la concurrence, which was joined by several Member States of the European Union and the European Economic Area (Belgium, Greece, Iceland, the Netherlands and Norway). The operation consisted in the takeover by a powerful U.S. healthcare company of an innovative company working on the development of a cancer screening blood test based on genomic sequencing technology (Press Release, 20 April 2021, for more details on this transaction, see p. 80).
Executive Vice-President Margrethe Vestager, in charge of competition policy, stated that the European Commission, had “opened an in-depth investigation precisely to assess whether the proposed transaction, which will combine the activities of Illumina and GRAIL, would threaten the ability of developers of cancer detection tests to effectively compete in this area and bring innovative products to the market” (EC Press Release, 22 July 2021).* This renewed approach to Article 22 makes it possible to mobilise this tool more effectively at the European level. This will make it possible to scrutinise takeovers of high-value companies more effectively, particularly in the areas of digital innovation, health or biotech, by taking into account the possible impact of these takeovers on innovation and the launch of innovative products.
*The Commission’s decision to examine this case is the subject of an appeal pending before the General Court of the European Union.