Brussels, 19 July 2022
The European Commission has sent a Statement of Objections alleging that Illumina and GRAIL breached the EU Merger Regulation by implementing the acquisition while the Commission’s in-depth investigation into the proposed transaction is still ongoing.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said:
If companies jump the gun and implement deals that are subject to our review, they undermine the effective functioning of our EU merger control system. This is a serious breach of the standstill obligation. Illumina and GRAIL have openly done so by implementing their deal while the Commission is still carrying out its in-depth investigation. This could result in hefty fines.
On 22 July 2021, the Commission opened an in-depth investigation over concerns that the proposed transaction may reduce competition and innovation in the market for the development and commercialisation of cancer detection tests based on sequencing technologies.
On 18 August 2021, while the Commission’s review was still ongoing, Illumina publicly announced that it had completed its acquisition of GRAIL. The EU Merger Regulation requires that merging companies do not implement transactions unless and until they have been notified and cleared by the Commission. This otherwise called the “standstill obligation” prevents the potentially negative impact of transactions on the market, pending the outcome of the Commission’s investigation. The early implementation of transactions in breach of EU merger review procedural obligations is a very serious infringement, as it undermines the effective functioning of the EU merger control system.
On 20 August 2021, the Commission opened an investigation to assess whether Illumina breached the ‘standstill obligation’.
In today’s Statement of Objections, the Commission takes the preliminary view that Illumina and GRAIL actually implemented the acquisition prior to the conclusion of the Commission’s in-depth investigation into the transaction.
If the Commission were to conclude that Illumina and GRAIL did implement the transaction prior to the conclusion of the Commission’s in-depth investigation, it could impose a fine of up to 10% of each companies’ annual worldwide turnover.
The sending of a Statement of Objections does not prejudge the final outcome of the investigation. GRAIL and Illumina now have the opportunity to respond to the Commission’s Statement of Objections.
Companies and products
Illumina, headquartered in the US, is a global genomics company, which develops, manufactures and commercialises next generation sequencing (‘NGS’) systems, including sequencing instruments, consumables and related services. Illumina’s NGS systems are medical devices used in a variety of applications, including by customers in the oncology space that develop and run blood-based tests that can detect cancer or select appropriate therapies for cancer patients. Illumina’s global turnover in 2020 was USD 3 billion. In Europe, Illumina commercialises its products both directly and via distributors.
GRAIL, also headquartered in the US, is a healthcare company developing blood-based cancer tests based on genomic sequencing and data science tools. GRAIL’s flagship product is “Galleri”, an early multi-cancer detection test, whose purpose is to detect around 50 cancers in asymptomatic patients from a blood sample. In April 2021, GRAIL initiated a limited commercialisation of Galleri in the US. GRAIL has two additional pipeline products: (i) a diagnostic aid for cancer testing used to confirm a diagnosis of cancer in symptomatic patients, and (ii) a minimal residual disease test, to detect potential relapse in patients after cancer treatments. GRAIL was founded by Illumina in 2016, and was spun off later in the same year.
Background
The Illumina/ GRAIL merger case
Following a referral request from six Member States, on 19 April 2021 the Commission accepted to review the proposed acquisition of GRAIL by Illumina and opened an in-depth investigation on 22 July 2021. On 13 July 2022, the General Court confirmed the Commission’s jurisdiction to review the transaction.
While the Commission’s in-depth investigation was still ongoing, Illumina publicly announced that it had completed its acquisition of GRAIL. As a result, on 29 October 2021, the Commission adopted interim measures to restore and maintain the conditions of effective competition.
Today’s investigation is being conducted in parallel to the ongoing Commission’s in-depth review of the Illumina/GRAIL merger as well as the interim measures proceeding.
Procedural background
A Statement of Objections is a formal step in an investigation, where the Commission informs the companies concerned in writing of the objections raised against them. The companies can then access the Commission’s file, reply in writing and request an oral hearing to present their comments on the case to representatives of the Commission and the national competition authorities.
The obligation to notify the Commission of transactions prior to their implementation is laid out in Article 4(1) of the EU Merger Regulation. The obligation not to implement a notifiable transaction either before its notification or before it has been declared compatible with the common market is laid down in Article 7(1) of the EU Merger Regulation. The ability of the Commission to impose fines in the event of a breach of Article 4(1) or 7(1) is laid out in Article 14(2) (a) and (b) of the EU Merger Regulation.
More information will be available on the Commission’s competition website, in the Commission’s public register under case number M.10483. Information on the ongoing merger review is available under case number M.10188, and on the interim measures procedure under case number M.10493 .