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EU Antitrust Review Of Illumina $8B Grail Merger Advances

 |  July 18, 2022

Illumina has failed to block a European Union competition investigation into its $8 billion takeover of liquid biopsy company Grail.

The genome-sequencing specialist corporation sought to remove a threat to the deal by challenging the legality of the antitrust case. However, straying from normal EU practice, the European Commission will scrutinize the merger despite it falling short of the revenue threshold.

By siding with the European Commission, Europe’s second-highest court, the General Court, has cleared the EU to resume a review that could lead to it blocking the deal and fining Illumina.

The case is important for EU antitrust authorities, including chief Margarethe Vestager who has repeatedly expressed her intention to expand the European Commission’s power to examine acquisitions of startups by big companies that could seek to shut nascent rivals, particularly in tech and pharmaceuticals deals.

In assessing the legality of the process, the court ruled that the Commission “is competent” to examine a merger when it receives a request from an EU member state. The court ruling applies to requests from member states that have a national merger control system but are unable to review the deal themselves because of the limited scope of their national legislation.

Illumina previously predicted the legal battle could continue until 2025, suggesting a willingness to appeal to Europe’s highest court.

Illumina finalized the deal in August and stated it would hold Grail as a separate company while waiting for the EU green light. Even though Illumina and Grail have pledged to keep their business operations separate pending final reviews, being officially found in breach of the EU’s “standstill obligation” or other merger regulations could lead to fines of up to 10% of each party’s annual worldwide turnover

The Commission has said Illumina potentially could be forced to sell Grail and pay a fine of up to 10% of its annual sales as punitive action.

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