![]() ![]() In that respect, the Commission found, in Novartis/GSK (see COMP/M.7872, 2015), that the acquisition of rights to develop, manufacture and commercialise a pipeline product undergoing Phase III clinical trials constituted a concentration, because such transaction was expected to enable the acquirer to successfully launch the product and generate turnover within a reasonable time frame. The acquisition of control over assets, including intangible assets (such as brands and patents), may be deemed a concentration if those assets constitute the whole or part of an undertaking to which turnover can be attributed either presently or in the foreseeable future. Is the acquisition of one or more patents or licences subject to merger notification? If so, when would that be the case? On 20 April 2021, the Commission accepted the requests submitted by several member states to review the deal. In this context, NCAs have recently made use of this provision to refer to the Commission the proposed US$7.1 billion acquisition of Grail (a start-up company developing innovative early cancer detection tests) by Illumina (a leading supplier of next generation sequencing systems for genetic and genomic analysis). The Commission subsequently issued a communication on 26 March 2021 aiming to provide guidance to companies on the application of this referral mechanism, confirming that the pharmaceutical sector, where innovation is an important parameter of competition, was a good candidate for future referral cases ( Commission Guidance on the application of the referral mechanism set out in Article 22 of the Merger Regulation to certain categories of cases, C(2021) 1959 final). In September 2020, the Commission announced that it would now welcome referrals from member states under article 22 even in cases where national competition authorities (NCAs) do not themselves have jurisdiction to review the transaction. Second, to fill the perceived enforcement gap in relation to ‘killer acquisitions’, the Commission has recently changed its approach with respect to the use of the referral mechanism provided for under article 22 of the EUMR, which allows member states to request the Commission to review a merger that does not meet the EU thresholds but that affects inter-state trade and threatens to significantly affect competition within the territory of the member state or states making the request. That being said, under two different referral mechanisms provided for in the EUMR (outlined below), the Commission also has the power to review mergers in the pharmaceutical sector that do not meet the above turnover thresholds but that, because of their likely impact on the European market, are nonetheless of a community interest.įirst, pursuant to article 4(5) of the EUMR, the parties to a concentration that does not have a Community dimension but that is notifiable in at least three member states may request the Commission, by way of a reasoned submission, to examine their merger. In application of article 1 of the EU Merger Regulation (EUMR), a merger must be notified to the European Commission (the Commission) when the combined aggregate worldwide turnover of all the undertakings concerned exceeds €5 billion, and the aggregate EU-wide turnover of each of at least two of the undertakings concerned exceeds €250 million, unless each of the undertakings concerned achieves more than two-thirds of its aggregate EU-wide turnover within one and the same member state (there is also an alternative set of lower thresholds that can apply if the above primary thresholds are not met). ![]() What are the relevant thresholds for the review of mergers in the pharmaceutical sector? Review of mergers Thresholds and triggers
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