USA — Illumina, the prominent US-based DNA-sequencing company, faces a staggering fine of €432 million (US$476 million) imposed by the European Union for its premature acquisition of cancer-test provider Grail.
The EU’s imposed fine has been dubbed “a record fine” by the Financial Times. It comes in the aftermath of Illumina’s acquisition of Silicon Valley cancer screening startup Grail for a staggering US$8 billion, which occurred prior to the European Commission concluding its investigation into potential anti-competitive aspects of the deal.
Eventually, the EC prohibited the merger. Regulators hope that the substantial nature of the fine will serve as a deterrent for other companies considering completing deals before receiving official approval. Illumina has expressed its intention to appeal the fine.
The European Commission, which handed down the fine, has labeled it the highest penalty it can impose.
Disputing the EU’s decision, an Illumina spokesperson contends that it is “unlawful, inappropriate, and disproportionate.”
The company asserts its potential to expand the availability, affordability, and profitability of Grail’s Galleri test, which enables the screening of over 50 types of cancers through a single blood draw.
Nonetheless, Illumina’s market value has plummeted from approximately US$75 billion in August 2021 to around US$29 billion.
The scrutiny by the European Commission began prior to the completion of Illumina’s acquisition of Grail in August 2021.
The investigation revolved around concerns that the deal could potentially grant Illumina a dominant position in the market, triggering anticompetitive outcomes.
Illumina, a major supplier of next-generation sequencing systems for genetic and genomic analysis, sought to merge with Grail, a health company focused on developing blood tests for early cancer detection.
The European Union accuses Illumina of deliberately and knowingly finalizing the deal while the Commission was still actively investigating the transaction.
Margrethe Vestager, the EU’s antitrust chief, expressed the seriousness of this breach, stating, “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.
“This is a very serious infringement, which requires the imposition of a proportionate fine, with the aim of deterring such conduct.”
This record-breaking penalty imposed by the European Union surpasses its previous largest fine of US$125 million imposed on Altice in 2018.
The decision has also drawn attention, with U.S. Republican lawmakers, a dozen state attorneys general, and several advocacy groups arguing that the merger could enhance the availability of life-saving technology on a wider scale.
The intention behind the hefty penalty is to send a clear message to companies that violate regulations, emphasizing the severe consequences of hasty acquisitions.
Illumina has reiterated that it remains committed to challenging the decision, leaving room for the possibility that a court may reduce or overturn the fine.
The impact of this ruling on the development of new treatments and competition within the high-risk sector remains uncertain.
This latest development compounds Illumina’s existing challenges, including the resignation of its CEO in June following a proxy battle with Carl Icahn.
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