The European Commission has fined Illumina approximately €432 million ($476 million) and Grail a “symbolic fine” of €1,000, for breaching EU merger rules by completing their acquisition before approval.

The Commission had raised a standstill obligation, a critical ruling that allows it to complete its role before structural changes are allowed to modify the competitive landscape.

The European Commission opened the investigation of Illumina’s acquisition of Grail in July 2021. The investigation began to assess if the deal would lower competition and innovation in the emerging market for next-generation sequencing-based cancer tests.

In September 2022, the Commission blocked the acquisition, citing concerns over anticompetitive effects.

However, while the investigation was still ongoing, in August 2021 Illumina announced that it had acquired Grail with all the necessary documents being executed. Furthermore, Grail merged with two wholly owned subsidiaries of Illumina.

In July 2022, the Commission sent Illumina and Grail a Statement of Objections finding that they breached the EU Merger Regulation by implementing their acquisition before the Commission’s investigation was complete.

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The FTC rejected Illumina’s acquisition of Grail in April 2023.

In the details of the fine issued on 12 July 2023, the Commission stands by its original statement that Illumina and Grail intentionally breached the standstill obligation. The Commission also found that by completing the transaction Illumina had a decisive influence over Grail.

According to the current EU merger regulations fines of up to 10% of the aggregated turnover of a company can be imposed in situations where standstill rules have been purposefully or negligently broken.

When the fines are set, the Commission must consider the extent of the infringement as well as any mitigating or aggravating circumstances. The fine must also deter others from committing the same act.

As Illumina strategically weighed up the risk of a gun-jumping fine against a high break-up fee if it did not take over Grail, a serious infringement was committed, which breached the standstill obligation.

Grail was also fully aware of the standstill obligation but was also involved in the infringement. The Commission imposed the symbolic fine of €1,000 on Grail as this is the first time it has imposed a fine for gun-jumping on a target company.

“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. Today’s decision to fine both companies, for a total amount of €432 million, shows that this is a very serious infringement,” said Margrethe Vestager, the European Commission’s Executive Vice-President in charge of competition policy.