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European Commission Outlines Intended Restorative Measures for Blocked Illumina-Grail Deal

This story has been updated to include comments from Illumina. 

NEW YORK – The European Commission has issued a Statement of Objections to Illumina and Grail on Monday, outlining the restorative measures it intends to adopt under the EU Merger Regulation.

The statement comes after the EC’s September prohibition of the Illumina-Grail merger, which the agency believed “would have stifled innovation and reduced choice in the emerging market for blood-based early cancer detection tests.”

Despite a pending review from the agency, Illumina had already completed its acquisition of Grail in August 2021, the EC said.

In the statement issued today, the EC laid out the intended restorative measures, which include divestment measures and transitional measures, that the agency expects Illumina to implement to unwind and dissolve the transaction with Grail.

Specifically, with the proposed divestment measures, the EC expects the dissolution of the transaction to restore Grail's independence from Illumina. Additionally, the agency said that Grail "must be as viable and competitive" after the divestment as it was before Illumina's acquisition, and the divestment "must be executable swiftly and with sufficient certainty."

As for the intended transitional measures, the EC expects they will ensure the two companies remain separate until the transaction is unwound. Moreover, the agency said the measures will also oblige Illumina to maintain Grail’s viability, and they will replace the interim measures adopted by the Commission in October.

The Commission said both Grail and Illumina now have the opportunity to respond to its Statement of Objections, and after hearing the parties, the agency may make the proposed measures legally binding for the companies. In case of noncompliance, the EC said it is empowered to impose "periodic penalty payments." The EC noted that firms failing to comply with interim measures can be fined up to 10 percent of their annual worldwide revenue under Article 14 of the EU Merger Regulation.

“The Commission continues its assessment of restorative measures following its September 2022 prohibition order, which Illumina has appealed. We believe divestment is not proportional to the speculative harm alleged by the Commission, especially given the benefits this merger will bring to patients in the EU and across the globe," said an Illumina spokesperson. "Any divestment order should be stayed until our appeal of the Commission’s prohibition decision has been resolved by the European courts."

The spokesperson also said Illumina has made a separate appeal for a July 2022 decision by the General Court of the European Union regarding the European Commission’s jurisdiction to challenge the Grail deal.