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European Commission Objects to Illumina Pushing Through Grail Purchase, Mulls Response

NEW YORK – The European Commission said on Monday that it is objecting to Illumina's decision to close on its purchase of Grail and is considering ways to make sure the companies operate separately while it continues to review the deal.

In a statement, the Commission said it has sent Illumina a "Statement of Objections," which includes interim measures it could take in response to the company's alleged breach of the European Union merger regulation's standstill obligation.

On Aug. 18, Illumina announced it had completed the $8 billion purchase of Grail, despite regulatory action in the US and Europe, but intends to hold the companies separate until those proceedings are resolved, one way or the other.

"Illumina and Grail completed their merger while our investigation is still ongoing. Under our rules, companies have to wait for the Commission's clearance before implementing deals that are subject to our review," Margrethe Vestager, the Commission executive VP in charge of competition policy, said in a statement. "Today, we send our objections to the companies informing them of the measures we intend to take to prevent the potentially detrimental impact of the transaction on the competitive structure of the market."

The Commission's planned interim measures "address a number of serious shortcomings identified" in Illumina's plans to hold the companies separate, it said, adding that it believes it can impose "periodic penalty payments in case of non-compliance" and fines up to 10 percent of annual worldwide revenues.

"We had anticipated that the Commission would seek to impose a hold separate order, and this is the reason why Illumina has already voluntarily agreed to such an arrangement; their proposals are based on Illumina's voluntary undertakings," an Illumina spokesperson said in an email. "Illumina will be discussing certain changes the Commission has suggested in the coming days and will be responding to the Commission's Statement of Objections in due course."

In July, the Commission announced it had opened a phase two, in-depth investigation into the deal, first announced by Illumina in September 2020. That investigation is ongoing.

The Commission on Monday called Illumina's actions "unprecedented" and said that this is the first time it has considered adopting interim measures.

Illumina and Grail will have the opportunity to respond in writing as well as orally. After hearing the parties, the Commission said it could make the interim measures binding and that Illumina and Grail would be obligated to comply.

Meanwhile, the US Federal Trade Commission is in the midst of a hearing before an administrative law judge in which the agency is making a case for unwinding the deal.

In Monday afternoon trading on the Nasdaq, shares of Illumina were down 2 percent while the Nasdaq Composite Index was down 3 percent.