2022-09-07| M&A

European Commission Prohibits Illumina’s Acquisition of GRAIL After The Company’s Win Against The FTC

by Max Heirich
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On September 6, the European Commission (EC) ruled against Illumina’s acquisition of GRAIL. Announced in September 2020, Illumina intended to reunite with GRAIL after its spin-off from the company in 2015. Illumina intends to review the EC’s order and appeal the decision.

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GRAIL and Illumina’s Shared History

GRAIL began in late 2015 as a spin-off from Illumina. Their goal was the development of an early cancer screening test for patients who didn’t express symptoms. For the development of this blood test, GRAIL received $100 million in Series A funding from Illumina and ARCH Venture Partners, as well as other investors.

By 2020 Illumina wanted GRAIL back. In a press release published on September 21 of that year, Illumina announced they entered into a definitive agreement for the acquisition of GRAIL for $7.1 billion. At the time, Francis deSouza, Illumina’s President and Chief Executive Officer, said, “Over the last four years, GRAIL’s talented team has made exceptional progress in developing the technology and clinical data required to launch the GalleriTM multi-cancer screening test. Galleri is among the most promising new tools in the fight against cancer, and we are thrilled to welcome GRAIL back to Illumina….”

However, in March 2021, the Federal Trade Commission filed a lawsuit against the merger, citing that the vertical merger would “diminish innovation in the US market for MCED tests.” Around the same time, the EC accepted six European Union (EU) member states’ requests to review the acquisition. 

Despite the ongoing legal issues, Illumina announced the completion of GRAIL’s acquisition in August 2021. Furthermore, the company rebuked the EC’s review, citing the fact that GRAIL has no business in the EU and, therefore, the EC has no jurisdiction.

Illumina’s legal woes finally took a turn for the better when, on September 1 of this year, an Administrative Law Judge ruled in favor of Illumina against the FTC’s challenge. However, just days later, the EC came to a decision themselves, prohibiting the acquisition. 

What does the European Commission’s Decision Mean?

Under the EU Merger Regulation, the EC prohibited Illumina’s acquisition of GRAIL. The EC argues that the merger would halt innovation and limit consumers’ options for blood-based early cancer detection tests. 

On their decision, Executive Vice-President Margrethe Vestager, in charge of competition policy, said, “With this transaction, Illumina would have an incentive to cut off GRAIL’s rivals from accessing its technology, or otherwise disadvantage them. It is vital to preserve competition between early cancer detection test developers at this critical stage of development. As Illumina did not put forward remedies that would have solved our concerns, we prohibited the merger.”

Illumina has previously argued that the EC has no jurisdiction over the acquisition as GRAIL does not conduct business within the EU. 

On the merger’s blocking, Charles Dadswell, General Counsel of Illumina, said, “We are disappointed with the European Commission’s decision prohibiting us from acquiring GRAIL back to Illumina. As we continue to believe, this merger is pro-competitive and will accelerate innovation. Last week the Chief Judge of the US Federal Trade Commission issued a decision supporting Illumina acquiring GRAIL.”

Going forward, Illumina intends to appeal the EC’s decision. However, the FTC is doing much the same with their own ruling. Likely, Illumina’s legal troubles over its acquisition of GRAIL are far from over. 

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