The Grail deal cost Illumina a record-breaking $476 million EU antitrust penalties

A record 476 million euro ($432 million) EU antitrust fine was imposed on the American genetic testing company Illumina (NASDAQ:ILMN) on Wednesday for completing its acquisition of Grail without first obtaining EU antitrust authorisation.

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Despite the deal falling short of the EU turnover requirement for inspection, Illumina has been engaged in a multi-front battle with the EU competition watchdog since it was compelled to request its approval in 2021.

According to the European Commission, the level of the fine—10% of Illumina’s global sales, the maximum permitted under EU merger regulations for such violations—highlighted the seriousness of the offense and was intended to deter such behavior.

The EU enforcer claimed that Illumina was able to exert significant control over GRAIL by prematurely concluding the agreement, which it did. The enforcer referred to the gun-jumping as an unprecedented and extremely serious violation.

“Companies break our regulations if they merge before we approve. Margrethe Vestager, the head of the EU’s antitrust agency, stated that Illumina and GRAIL “knowingly and deliberately did so by implementing their tie-up as we were still investigating.”

For its active role in the violation, Grail received a symbolic 1,000 euro fine, marking the first time a target firm has been penalized.

Illumina called the charge “illegal, inappropriate, and disproportionate” and announced that it will contest the fine. For fiscal year 2022, it has set aside $458 million, or 10% of its consolidated annual income, for the fine.

The company stated in a statement, “We finalized the acquisition in 2021 since there was no obstacle to closing in the US and the agreement term would have ended before the EC could make a decision on the merits.

The timetable for the deal was based on the EC’s public pronouncements that it would not assert jurisdiction over mergers of this kind until new guidelines were established, but the EC nonetheless did so before making good on its pledge to do so.

($1 = 0.9072 euros)