The European Court of Justice (ECJ) made a landmark decision on Tuesday that challenges the authority of the European Commission. The judges ruled in favor of the US biotech company Illumina, deciding that the EU Commission did not have a legal basis to investigate Illumina's acquisition of the cancer screening start-up Grail in 2021.

The acquisition worth 8 billion dollars was reviewed by the EU Commission despite Grail's lack of revenue or presence in the EU – usually a requirement for such investigations. Ultimately, in June, Illumina was forced to divest Grail, which the Commission considered a necessary step to preserve competition in the emerging cancer diagnostics industry.

The European Court of Justice has now overturned the Commission's decision and ruled that the Commission is not authorized to take over merger cases from national competition authorities that do not have a European dimension, if they are not themselves competent. As a result of this decision, Illumina does not have to pay the imposed fine of 432 million euros.

Illumina welcomed the verdict and emphasized that the decision "confirms the long-standing view that the European Commission has exceeded its powers." While the ruling, which is final and cannot be appealed, will not have direct effects on Illumina as the company has already sold Grail, it could significantly influence future merger controls in the EU, particularly in the technology sector.

U.S. regulatory authorities, including the Federal Trade Commission, also expressed concerns and in 2023 urged Illumina to divest Grail in order to protect competition in the U.S. market for life-saving tests.

Margrethe Vestager, the outgoing EU Competition Commissioner, remained unfazed and announced that the Commission would continue to take over merger cases from member states that are reviewed under national rules. She also emphasized that the EU would further expand its powers of merger control to ensure that cases affecting Europe can be reviewed even if they do not meet the EU notification thresholds.

The verdict could have far-reaching consequences and serve as a warning to future commissioners, as explained by Kay Jebelli from the tech advocacy group Chamber of Progress: "In this landmark ruling, the court rejected the unconstitutional expansion of power by the commission. This should serve as a warning to all future commissioners; you cannot simply create new competition powers out of thin air.