EU slaps record $476 million fine on Illumina for Grail deal without antitrust approval

Illumina, the US genetic testing company has been fined by the European Union for a record 432 million euros (USD 476 million) on Wednesday (July 12). The fine has been imposed for closing its takeoverof cancer test maker Grail without obtaining EU antitrust approval.

Illumina was forced to seek EU competition watchdog's approval in 2021 despite the deal fell short of the bloc's turnover threshold for scrutiny. Illumina has been fighting with the competition watchdog on several fronts sincethen.

In September 2022, the deal was eventually blocked. Regulators were concerned that Illumina, after acquiring Grail, would have an incentive to cut off Grail's rivals from accessing its technology to develop blood-based early cancer detection tests to compete with Grail.

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The European Commission said that the size of the fine amounts to 10 per cent of Illumina's global revenue and it is the maximum allowed under EU merger rules for such infringements. The EC said that this underscored the seriousness of the offence and aimed to deter such conduct.

By closing the deal prematurely, Illumina was able to exercise a decisive influence over Grail, which it did, the EU enforcer said, calling the move unprecedented and a very serious infringement.

"If companies merge before our clearance, they breach our rules. Illumina and Grail knowingly and deliberately did so by implementing their tie-up as we were still investigating," EU antitrust chief Margrethe Vestager said in a statement.

For its active role in the infringement, Grail was given a symbolic 1,000 euro fine. This marks the first time a target company has been sanctioned.

Fine unlawful, disproportionate, says Illumina

Illumina has criticised the fine as "unlawful, inappropriate, and disproportionate". The company has said that it would appeal the penalty. It has set aside USD 458 million which represents 10 per cent of its consolidated annual revenue in fiscal year 2022.

"We closed the transaction in 2021 because there was no impediment to closing in the U.S. and the deal timeframe would have expired before the EC could reach a decision on the merits," the company said in a 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."

Illumina has challenged the EU veto of the deal as well as its decision to examine the deal despite it not meeting the EU merger criteria and also the EU order to keep the Grail separate so that the deal con be unwound.

(With inputs from agencies)

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