EU competition regulator issues ultimatum to Illumina for $ 8 billion Grail deal
The European Commission has handed a list of objections to Illumina and Grail over their decision to proceed with their multibillion-dollar merger despite the ongoing investigation by regulators. He also noted the steps the watchdogs plan to take to curb the potential effects of the deal on the wider market.
The commission described its actions as an unprecedented step in response to the companies’ provocative move last month, which finalized an $ 8 billion deal amid ongoing antitrust investigations on both sides of the Atlantic.
“This is the first time that companies openly implement their agreement as we conduct a full investigation,” Margrethe Vestager, executive vice-president of the competition policy committee, said in a statement.
“Under our rules, companies must wait for approval from the commission before implementing the agreements under our review,” Vestager said. “Today, we address our objections to companies, informing them of the measures we plan to take to prevent the potentially detrimental impact of the transaction on the competitive structure of the market.”
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Although Illumina and Grail are committed to keeping their business activities separate pending final exams, being officially recognized in violation of the EU’s “standstill obligation” or other regulations in force. merger matter could result in fines of up to 10% of each party’s global annual revenue, which for Illumina alone to exceed $ 3.2 billion in 2020 – and the commission said that in its preliminary opinion, the companies had already done so.
The DNA sequencing giant went ahead with the acquisition of its old cancer testing spinoff company in late August after the deal was announced a year ago. The meeting with Grail would give Illumina a broad reach in the clinical testing markets, starting with the recently launched Galleri blood test, which aims to detect the first signs of cancer regardless of its location in the body.
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However, European antitrust watchdogs and the US Federal Trade Commission (FTC) said the deal could give Illumina an opportunity to slow the R&D progress of potential competitors in cancer diagnostics. due to its large global market share in necessary DNA analysis equipment.
The commission opened a full investigation into the companies’ proposal last July following a month-long preliminary review, while the FTC said it would largely postpone its actions until a decision was made. was taken on the other side of the pond – a move Illumina CEO Francis deSouza described as “time-wasting maneuvering” last summer as time passed relative to the original conditions of the lake. acquisition.
The commission did not provide further details on the specific objections it made to Illumina, but said its measures “go beyond Illumina’s proposal” to retain Grail as a separate subsidiary in exclusive property and identified “a number of serious shortcomings” in the business project.
Illumina and Grail now have the option of responding to European regulators, after which the committee said it could decide to make the interim measures legally binding and potentially enforced with “penalty payments” for non-compliance.