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Illumina must pay a €432 million ($476 million) fine for buying the cancer-testing firm Grail without regulatory approval, the European Commission said today.
The San Diego-based company closed the deal in 2021 despite the EU’s ongoing antitrust investigation. More than a year later, the bloc told Illumina to unwind the transaction, but has yet to issue a formal divestiture order.
“EU merger rules require that merging companies not to implement mergers until approved by the Commission (“the standstill obligation”),” said the EU in a statement. “It is a cornerstone of the European merger control system, that enables the Commission to carry-out its role before structural changes modify the competitive landscape.”
Illumina and Grail, the EU added, “knowingly and intentionally breached the standstill obligation.” On top of the fine on Illumina — which represents 10% of Illumina’s turnover — it is also charging Grail a “symbolic fine” of €1,000.
Illumina called the move “unlawful, inappropriate and disproportionate” and pledged to appeal the fine, the highest ever imposed by the EU on a company for jumping the gun during an antitrust investigation. The previous record was a $146 million fine levied against the telecommunications company Altice.
“We closed the transaction in 2021 because there was no impediment to closing in the US and the deal timeframe would have expired before the EC could reach a decision on the merits,” said an Illumina statement. “The deal timeframe relied on the EC’s public statements that it would not assert jurisdiction over mergers of this type until new guidelines were issued, yet the EC nonetheless asserted jurisdiction over the merger before issuing the promised guidelines.”
The company has challenged the EU’s veto and its jurisdiction over a deal involving two American companies, with a decision from the European Court of Justice expected in late 2023 or early 2024, according to an Illumina spokesperson. If Illumina prevails, it is expected to get the fine back.
In the US, the Federal Trade Commission this spring told Illumina to divest Grail, another decision Illumina is fighting.
Between Grail, searching for a new CEO and growing competition poaching its executives, Illumina faces a pivotal year. Analysts expect the company to divest Grail, but the ability to do so on Illumina’s terms hinges on winning the antitrust cases.
Both the EU and FTC have taken a more aggressive approach to antitrust enforcement that was years in the making. Illumina and Grail don’t compete, but the FTC worries Illumina will use its dominance in DNA sequencing to deter other blood testing firms.
The FTC’s novel strategy of focusing on cross-market competition encountered another setback earlier this week when a federal judge ruled against the agency trying to delay Microsoft’s $70 billion takeover of Activision Blizzard.
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