Malta M&A Watch: European Commission continues to examine below turnover threshold transactions using Article 22 EUMR

Article 22 of the EU Merger Regulation (‘‘Article 22 EUMR’’) continues to make headlines with the European Commission (the ‘‘Commission’’) claiming jurisdiction over two new transactions only last month. Both transactions did not have a community dimension and were not caught by national merger control regimes. This article provides a brief synopsis of Article 22 and its evolving nature.

We explain below what the Commission ‘s position is on Article 22 EUMR and why dealmakers should seriously consider factoring into their SPAs provisions catering for the possibility that their transactions may require merger clearance by the Commission in such cases.


The goal of merger control is to carefully assess transactions that may harm competition in the market.

Since the introduction of EU merger control, the Commission could generally only review transactions where the parties have certain turnover thresholds (the ‘‘Turnover Threshold Test’’). Such transactions are deemed to have a community dimension, making prior notification to the Commission mandatory, and the implementation of a transaction is only possible once the Commission has given its go-ahead.

On the other hand, transactions whose combined turnover does not satisfy the Turnover Threshold Test are reviewed by the respective national competition authorities (‘‘NCAs’’) of one (or several) of the Member States if caught under their national merger control regimes or if not, simply implemented without any sort of assessment, given their small size.

Certain transactions raising competition concerns, particularly in the pharma and tech industries, may fall outside the Commission’s and the NCAs’ traditional jurisdictional scope. This occurs where one of the merging parties, typically the target, would have little to no turnover, resulting in the transaction being implemented without any scrutiny.

Article 22 – a reappraised use

The Commission has relied on Article 22 EUMR in an attempt to address this issue. Article 22 EUMR allows Member States that come across transactions of concern to refer them to the Commission for assessment. This is permitted where such transactions affect trade between Member States and threaten to significantly affect competition within the territory of the Member State(s) making the request. Article 22 EUMR expressly depends on the Member States’ referral. The Commission may only invite but cannot force any such referral.

Whilst historically this provision was included in the EU Merger Regulation as a tool to be used by Member States which did not have a merger control regime, the Commission has in March 2021 ushered in a new purpose of using Article 22 EUMR. Any Member State which considers that a particular transaction happening within its jurisdiction, merits attention, regardless of whether the transaction falls within that Member State’s jurisdiction, may refer the transaction to the Commission under Article 22 EUMR.

In support of this new approach, the Commission published a guidance paper (the ‘‘Guidance Paper’’) providing insight for Member States when considering the possibility of referring a transaction to the Commission. The Guidance Paper also details how the Commission may, where it becomes aware of a transaction that is appropriate for a referral under Article 22 EUMR, invite Member State/s to refer it to the Commission.

Grail / Illumina – testing out Article 22 EUMR

This reappraised approach of applying Article 22 EUMR has already been put to the test in the Grail/Illumina transaction where the General Court confirmed the legality of this approach, allowing the Commission to extend its jurisdiction over such referred transactions, regardless of their turnover. However, this is currently being contested before the Court of Justice (‘‘CJ’’) by Grail and Illumina. The CJ’s outcome is eagerly awaited by both competition authorities and industry participants alike.

Article 22 – Latest Developments

The pending appeal before the CJ has not deterred the Commission from continuing to encourage Member States to refer transactions for its assessment. On 17 August 2023, the Commission accepted the referral of Qualcomm’s acquisition of Autotalks whilst just a couple of days later, it accepted jurisdiction over the European Energy Exchange’s (‘‘EEX’’) acquisition of Nasdaq Power. Both transactions failed to satisfy the EU Merger Regulation’s Turnover Threshold Test and were not reportable in any Member State.

Key Takeaways

The Qualcomm/Autotalks and EEX/Nasdaq referrals attest to the Commission’s insistence on using Article 22 EUMR as a tool to assess below-turnover threshold transactions. These referrals also attest to NCAs’ willingness to cooperate with the Commission on this issue.

These referrals further indicate that no industry is spared from the Commission’s purported extended jurisdiction in terms of Article 22 EUMR. In light of this, all industries should consider the risk of referrals in their M&A activities.

For further information, please contact Sylvann Aquilina Zahra, Clement Mifsud-Bonnici and Chris Grech.