Antitrust

On 10 January 2025, Nvidia brought an action against the European Commission (“EC”)’s decision to review Nvidia’s acquisition of Run:ai, following a referral request from the Italian competition authority under Article 22 of the EU Merger Regulation (“EUMR”).  The deal failed to meet both the EUMR and the Italian merger thresholds, and was ‘called in’ (and then referred to the EC) by the Italian authority on the basis of its powers to review below-threshold deals.  Nvidia’s appeal comes despite receiving unconditional EC clearance for the deal.

The case is notable as it concerns the first instance of an Article 22 referral accepted by the EC since the European Court of Justice (“ECJ”)’s judgment in the Illumina / Grail saga in September 2024.  The latter clarified that the EC may not encourage or accept referrals of transactions from EU national competition authorities (“NCAs”), insofar as these do not have jurisdiction to review those transactions under their national regimes.  Crucially, however, the judgment did not expressly consider the legality of referrals based on national authorities’ discretionary ‘call-in’ powers, i.e., beyond their standard review powers based on the mandatory national thresholds.  The outcome of Nvidia’s challenge, further details of which were published on 24 February 2025, is expected to bridge this gap.

REACTIONS TO THE ILLUMINA/GRAIL JUDGMENT

Some of the immediate reactions following the ECJ’s landmark judgment did not come as a surprise.  In particular, the EC had to withdraw its previous 2021 guidance on how Article 22 referrals would be pursued under its ‘recalibrated approach’.  The ruling also led to the withdrawal of a series of decisions in the Illumina/ Grail case, as well as referral requests from seven NCAs regarding Microsoft’s acquisition of Inflection AI.  

However, on the back of the judgment, the EC’s focus also quickly shifted to encouraging (and, in the case of Nvidia/Run:ai, accepting) referral requests on the basis of national call-in powers, i.e. the discretionary ability of national authorities to review transactions that fall below the standard national merger thresholds.  This shift was designed to ensure that, despite the ECJ’s intervention, the Article 22 referral mechanism remains broad enough to capture potentially problematic acquisitions that would otherwise fall under the radar.  Commenting on the outcome of Nvidia/Run:ai, Teresa Ribera, the new EU competition commissioner, noted the “importance of member state referrals in enabling the Commission to continue to check potentially problematic transactions.”

Presently, eight NCAs (Italy, Denmark, Hungary, Ireland, Latvia, Lithuania, Slovenia and Sweden) already enjoy such discretionary call-in powers, and the EC has been actively encouraging other Member States to enact legislation to that effect, which has led to the following notable developments.  

• The Czech Competition Authority (“CCA”) recently made a proposal for legislative changes to be enacted, including to introduce a general call-in power for the CCA to review below threshold mergers.  
• The French competition authority recently launched a public consultation on the introduction of a merger control system for transactions below the current notification thresholds.  Launched in January 2025, the public consultation presents three options:
  • Implementing targeted call-in powers with quantitative and qualitative criteria. These powers would be targeted and subject to time limits in line with international practice;
  • Introducing mandatory notifications for companies with significant market power; and
  • Limiting intervention to addressing anticompetitive practices.
• The Dutch competition authority is currently considering revising its thresholds and introducing call-in powers (as discussed in our previous post).  Last December, Chairman Martijn Snoep mentioned the authority’s desire to potentially combine two elements in order to tackle below-threshold deals:
  • Increasing the turnover thresholds by a third; and
  • An asymmetric call-in power according to which one of the undertakings would need to have a turnover of e.g., EUR 30 million, and the other would have none.

Separately, it is worth reminding that below threshold deals may also be pursued ex post on the basis of antirust rules, pursuant to the ‘Towercast’ doctrine.  Notable case studies in this respect are the Belgian authority’s recent investigation into a tie-up between two of the country’s main flour suppliers, and an earlier probe by the same authority into the Proximus / EDPnet deal. 

THE NVIDIA APPEAL – WHAT NEXT FOR ARTICLE 22 REFERRALS? 

As noted above, in its judgment the ECJ established that the legality of Article 22 referrals depends on NCAs having jurisdiction under national rules, but did not consider the specific scenario of NCAs having the power to investigate transactions falling below the relevant national merger thresholds.  Nevertheless, the judgment did extensively retrace the history and purpose of the Article 22 referral in the context of the EUMR, as well as the key legal principles underpinning the EU merger control system. 

In particular, the ECJ noted that, aside from protecting Member States without a merger control regime, the referral mechanism is primarily meant to avoid multiple notifications at the national level, in situations where (despite the EUMR thresholds not being met) the EC is better placed to investigate.  The ECJ also concluded that an expansive interpretation of Article 22 is “liable to upset the balance between the various objectives pursued by [the EUMR]” and “undermines the effectiveness, predictability and legal certainty that must be guaranteed to the parties to a concentration.”  Indeed, merging parties “must be able easily and quickly to identify to which authority they must turn, and within what time limit and in what form”.  

Nvidia’s challenge to the EC’s decision is likely grounded in these principles. In particular, even though the EC cleared the transaction unconditionally on 20 December 2024, Nvidia is contesting the fact that the EC unlawfully accepted a referral request from the Italian authority based on the latter’s exercise of “loosely defined, ex post, discretionary call-in powers”.  As such, Nvidia argues the decision is incompatible with “Article 22’s legislative history, context, and intended object”, and breaches the general principles of institutional balance, legal certainty, proportionality, and equal treatment.  

It remains to be seen whether the General Court (and potentially the ECJ, in case of appeal) will side with the EC.  Either way, the future ruling(s) will play an important role in clarifying the boundaries of the referral mechanism.  In particular, another major loss in court can be expected to heighten calls for the EC to take forward legislative amendments to the EUMR, with a view to either introducing lower thresholds, or to revise Article 22 to explicitly allow the referral of below-threshold transactions under specific circumstances. 

In the meantime, companies will need to continue to closely monitor the emergence of new national tools designed to enable merger review of below-threshold deals, and the evolving practice of NCAs in applying these tools.