- The European Commission has proposed interim measures "to restore and maintain effective competition" while it wraps up its review of Illumina's $8 billion acquisition of Grail.
- Illumina, facing the prospect of the deal expiring, closed the takeover last month despite the Commission's ongoing review. The Commission has now hit back with measures to counter the effect of the merger.
- Full details of the measures are yet to emerge but the Commission said they go beyond Illumina's unilateral decision to keep Grail separate until the situation is resolved. As Illumina warned at the time of the merger, the Commission could fine it 10% of its annual turnover.
The Commission’s statement to disclose the planned interim measures points to the unchartered territory Illumina moved into when it closed the Grail deal. Commission executive vice president Margrethe Vestager, who is in charge of competition policy, said the merger is the first time companies have "openly" implemented a deal during an in-depth investigation. In response to the "unprecedented" action, the Commission is proposing interim measures for the first time.
Illumina and Grail have a chance to respond to the Commission's objections before the imposition of the interim measures. The Commission said Illumina and Grail will be legally obliged to comply with the measures and could be fined up to 10% of their turnover or revenue if they fail to do so. Illumina and Grail also face a fine of up to 10% of their turnover if a separate probe finds they broke merger rules.
While the situation is new, the Commission's response so far is in line with Illumina's expectations. "We had anticipated that the Commission would seek to impose a hold separate order, and this is the reason why it has already voluntarily agreed to such an arrangement; their proposals are based on Illumina's voluntary undertakings," Illumina said in a statement shared with Reuters.
The Commission's action is another early step in a saga that could run for years. If the Commission opposes the merger when it completes its review, Illumina's path forward will be through the courts. Illumina, which argues the European Union lacks jurisdiction over the deal, expects a court ruling on its challenge in the first quarter. With Illumina committed to appealing a negative decision, the legal battle could continue until around 2025.
If Illumina ultimately loses its fight with the Commission, it will need to offload Grail, potentially in an IPO. The path to that outcome could feature significant fines but there was also a cost to waiting for the Commission to complete its review, with Illumina needing to pay a $300 million termination fee and make a $300 million investment in Grail if it failed to close the deal by Dec. 20.