Dive Brief:
- The European Commission on Thursday ordered Illumina to unwind its 2021 acquisition of liquid biopsy-maker Grail, establishing deadlines for the company to follow as well as potential penalties for non-compliance.
- The commission in September 2022 prohibited Illumina from buying Grail, maker of a blood-based early cancer detection test, over concerns that the merger would stifle innovation in the emerging market. Illumina and Grail completed the $8 billion deal anyway, in an alleged breach of EU merger control rules.
- Illumina, which is appealing the EC’s decision, said in a statement Thursday that it was reviewing the order.
Dive Insight:
Illumina has been expecting the EC’s divestment instructions while maintaining that the commission does not have jurisdiction over the merger. The gene-sequencing industry leader is appealing the jurisdictional issue with the European Court of Justice.
The company has said it will pursue parallel paths, working to divest Grail according to the commission’s order, while pursuing the legal appeal.
Thursday’s order requires Illumina to restore Grail’s independence “to the same level” that it operated at before the acquisition. The EC put measures in place in 2021 requiring Illumina to hold Grail separate.
“Restoring GRAIL’s independence will remove the harm to competition resulting from Illumina’s ability and incentive to delay or disadvantage GRAIL’s rivals,” the commission said in a statement.
Grail also must become “as viable and competitive after the divestment as it was before Illumina’s acquisition,” the EC said. “This will ensure that the innovation race between GRAIL and its rivals can continue in conditions similar to those in place before the transaction.”
The commission did not disclose its timeline for Illumina to meet requirements under the new order, but said the divestment must be executed “within strict deadlines.”
The order also specifies that if Illumina does not follow the measures outlined, the commission said it can impose periodic penalty payments of up to 5% of the company’s average daily aggregate revenues and a fine of up to 10% of its annual worldwide revenues.
In July 2023, the commission ordered Illumina to pay a 432 million euro fine for closing the Grail deal without its approval.
Illumina’s purchase of Grail prompted a proxy fight led by activist investor Carl Icahn that forced the ouster of Chair John Thompson in May. CEO Francis deSouza stepped down from his post several weeks later.
Illumina is also appealing an order from the Federal Trade Commission to divest Grail.