San Diego's genetic sequencing pioneer, Illumina, has been slapped with a record-breaking $476 million fine by the European Union (EU) over its controversial Grail deal, according to a Times of San Diego article. Despite this, Illumina's shares rose by 2.3% to $189.13 on July 12, 2023, Baystreet reported.
Illumina acquired cancer test maker Grail without securing antitrust approval, breaching EU regulations – a fact highlighted by the European Commission, which described the move as unprecedented and a very serious infringement. The EU has concerns that, with Grail under its belt, Illumina could potentially stifle competition and cut off Grail's rivals from accessing its technology to develop blood-based early cancer detection tests.
The fine amounts to 10% of Illumina's global revenue, the maximum allowed under EU merger rules for such infringements, and exceeds the previous largest merger regulation fine of $125 million imposed on telecommunications company Altice in 2018.
Interestingly, Illumina had already set aside $458 million in anticipation of the fine. The company now plans to appeal the penalty, calling it "unlawful, inappropriate, and disproportionate."
Illumina's acquisition of Grail has faced several hurdles. The deal was initially blocked in September 2022, but Illumina persisted in its pursuit, closing the transaction in 2021. The company cited the lack of impediments to the deal in the U.S., claiming the deal timeframe would have expired before the European Commission could reach a decision.
EU antitrust chief Margrethe Vestager said in a statement, "If companies merge before our clearance, they breach our rules. Illumina and Grail knowingly and deliberately did so by implementing their tie-up as we were still investigating."
Grail was given a symbolic 1,000 Euro fine for its active role in the infringement, marking the first time a target company has been sanctioned in this context, the Times of San Diego reported.
Despite the hefty EU fine and ongoing challenges, Illumina remains determined to fight its corner. The company has stated that success in the second case between them and the EU would nullify the fine and expects the EU court to rule in late 2023 or early 2024.
Illumina also has a separate appeal against a U.S. Federal Trade Commission order to divest Grail, demonstrating the company's commitment to defending its position amidst regulatory scrutiny on both sides of the Atlantic.
