In its September 2024 Illumina/Grail judgment, the Court of Justice of the European Union (CJEU) rebuffed the European Commission’s strategy of using Member State referrals under Article 22 of the EU Merger Regulation (EUMR) to obtain jurisdiction over deals raising significant competition issues but falling below the EUMR’s mandatory notification thresholds. The CJEU held that Member States could not refer transactions to the Commission unless the authority itself had jurisdiction to review the transaction under national law, which was not the case in Illumina/Grail.

This setback prompted debate about whether the Commission needs new tools to combat “killer acquisitions” of small and medium-sized European companies by “foreign companies,” as Commission President Von der Leyen put it in her mission letter to competition commissioner nominee Teresa Ribera Rodríguez.    

In October 2024, however, the Commission announced that the Italian Competition Authority (ICA) had referred Nvidia’s proposed acquisition of Run:AI to the Commission for review under the EUMR. Run:AI is an Israeli startup supplying software to manage and optimize AI compute infrastructure. The ICA’s referral may suggest that Illumina/Grail poses less of a threat to the Commission’s Article 22 EUMR policy than many assumed. Nvidia notified the transaction to the Commission on November 15, 2024.

Nvidia’s acquisition of Run:AI reportedly triggers no mandatory notification requirements under EU Member State laws or the EUMR. Nonetheless, the ICA had jurisdiction to review the transaction under its “call in” powers allowing the authority to review transactions that (i) meet only one of the two quantitative thresholds (unless the parties’ combined worldwide turnover is at least EUR 5 billion) and (ii) preliminarily raise concrete competition risks (see here for more details). Italy is not the only country to have expanded its merger review regime to capture sub-threshold transactions. Other European countries, such as Denmark, Hungary, Ireland, Latvia, Lithuania, Slovenia and Sweden have gained similar powers. Still other jurisdictions – in particular Austria and Germany - have introduced deal-value thresholds to capture transactions whose competitive significance may not be reflected by the target’s turnover.  

Nvidia/Run:AI - the first Article 22 referral following Illumina/Grail – tests the limits of that judgment. In Illumina/Grail, the CJEU faulted the Commission’s claim that Member States could refer transactions to the Commission even if they lacked jurisdiction themselves on the basis that the Commission’s interpretation decreased legal certainty. The CJEU identified turnover criteria as “an important guarantee of foreseeability and legal certainty” and noted that if Member States wanted to address any concerns about “killer acquisitions” they could revise their national thresholds downwards. The CJEU did not discuss the possibility that Member State laws, such as Italy’s, might give national authorities discretion to “call in” transactions.

Broad “call-in” powers like the ICA’s address the CJEU’s requirement in Illumina/Grail that an authority referring a transaction to the Commission under Article 22 EUMR have jurisdiction over the transaction under national law. But they arguably do not address the CJEU’s concern about legal certainty, because companies cannot know “quickly and easily” whether a sub-threshold transaction will be “called in.” On this basis, although the transaction has now been notified, Nvidia could still be tempted to challenge the Commission’s acceptance of jurisdiction under Article 22 EUMR, as Illumina did.  

If the Commission’s acceptance of jurisdiction to review Nvidia/Run:AI based on the ICA’s Article 22 EUMR referral request stands, the apparent setback to the Commission’s strategy from the Illumina/Grail defeat may prove short-lived. If Nvidia contests the Commission’s jurisdiction, however, the stage may be set for another multi-year battle before the Union courts.