2021-04-20| M&APolicy

Amidst Battle with FTC, Illumina Faces Scrutiny from EU Over its $7.1B GRAIL Merger

by Rajaneesh K. Gopinath
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April 20, 2021 – The European Commission said today that EU antitrust regulators will probe into Illumina’s $7.1 billion proposal to acquire GRAIL, Inc. following a request made by six countries.

France has appealed for fresh scrutiny of the acquisition under new regulations announced by the European Commission last month. The request was backed by three EU countries, Belgium, Greece, and the Netherlands, along with two non-EU members, Norway and Iceland.


EU Competition Policy

EU’s competition rules ensure a fair contest between companies in providing products or services to consumers at a competitive price. This regulation is important for the EU to operate as a single market. Last month, the commission announced its intent to have more authority over small merger deals involving digital, pharma, biotech, and certain industrial sectors. To that end, it decided to apply referrals under Article 22 of the Merger Regulation on transactions involving companies with low turnover, but high competitive potential.

Article 22(1) provision of the EU Merger Regulation allows Member States to request the Commission to examine a merger that does not have an EU dimension, but still affects trade within the single market and threatens to disrupt competition. Now based on the request made by France and other countries, the commission considers Illumina’s vertical merger of GRAIL would meet the criteria for referral under Article 22.

“The combined entity could restrict access to or increase prices of next-generation sequencers and reagents to the detriment of Grail’s rivals active in genomic cancer tests following the transaction,” the Commission said in a statement.


Illumina’s Response

Meanwhile, Illumina released a press statement registering its disagreement with the commission’s decision to review the acquisition. The San Diego genomics giant stressed that EU authorities do not have any jurisdiction over this merger.

“Reuniting GRAIL and Illumina will allow us to bring GRAIL’s breakthrough early detection multi-cancer test to patients across the world faster and consequently save lives,” said Francis deSouza, Chief Executive Officer of Illumina. “We do not believe that the European authorities have jurisdiction to review the GRAIL acquisition and look forward to resolving this matter expeditiously.”

Menlo Park-based cancer detection start-up GRAIL was founded by Illumina in 2016 but spun out as a standalone company. It quickly raised $2 billion to support its innovative technology platform and develop Galleri, a multi-cancer screening test.

In September 2020, Illumina announced that it would acquire GRAIL in a proposed $7.1 billion deal. However, it encountered a familiar problem that had earlier upset its proposed acquisition of another genomics company, PacBio. Three weeks ago, the U.S. Federal Trade Commission (FTC) filed a complaint to block the Illumina GRAIL merger citing a potential monopoly in the multi-cancer screening kit market.

Illumina maintains that the two companies do not compete with each other in any way and the acquisition would only benefit patients. The merger would allow it to leverage its strengths in clinical development, manufacturing, and expertise in global regulatory laws and reimbursement to push affordable multi-cancer tests to the market.

Related Article: FTC Blocks Illumina’s $7 Billion Acquisition Bid to Restrict Monopoly of Cancer Diagnostic Market

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