Illumina and GRAIL Violated European Merger Law


European Commission fines companies for merging without approval.

 

  • Illumina, GRAIL consummate merger immediately after EC investigation began.
  • Commission to decide whether the companies must undo their merger, as the FTC did in April, finding it anticompetitive.
  • MoginRubin’s, Dan Mogin, Tim LaComb, and Jonathan Rubin last wrote about the merger and the FTC action HERE.
  • Attention Editors and Reporters:  To speak with an authority on competition law at MoginRubin, contact Sheilah Buack by email or by calling +1 619.687.6611.

The European Commission has fined Illumina €432 million ($483 million) and lodged a “symbolic” first-offense fine of €1,000 ($1,119) against GRAIL for consummating their merger without Commission approval, a breach of European Union merger control rules. Next, the Commission will decide whether to unwind the deal, as the Federal Trade Commission did in April (See In Reversal of ALJ, FTC Commissioners Order Illumina to Unwind GRAIL Deal by Dan Mogin, Tim LaComb, and Jonathan Rubin).

The Commission opened an in-depth investigation into Illumina’s acquisition of GRAIL in July 2021 and blocked the deal as anticompetitive in September 2022. The Commission said it would stifle innovation and reduce the number of options in the emerging market for blood-based early cancer detection tests.

In the month following the start of the Commission’s investigation, however, Illumina announced it had completed the GRAIL acquisition. To further complicate matters, GRAIL merged with two wholly-owned subsidiaries of Illumina, which paid GRAIL shareholders for their shares. In July 2022, the Commission notified Illumina and GRAIL that they were in violation of the EU Merger Regulation.

On July 12, 2023, the Commission confirmed its preliminary view that Illumina and GRAIL intentionally breached the regulation’s standstill obligation. The Commission said that “by closing the transaction Illumina was able to exercise a decisive influence over GRAIL and it actually exercised it.”

Calling this a serious and unprecedented infringement that undermines the effective functioning of the EU merger control system, the Commission wrote:  “Illumina strategically weighed up the risk of a gun-jumping fine against the risk of having to pay a high break-up fee if it failed to takeover GRAIL. It also considered the potential profits it could obtain by jumping the gun, even if it were ultimately forced to divest GRAIL. It then intentionally decided to proceed and to close the deal while the Commission was still investigating the transaction that was ultimately prohibited.”

 

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