After a years-long antitrust battle, the European Commission on Friday approved Illumina’s plans to divest Grail. However, Illumina said while there is “an agreement with the EC on specific divestment options” that “does not mean the method of divestment has been finalized.”
The European Commission announced Friday that it has approved gene sequencing company Illumina’s plan to divest cancer test maker Grail, marking the end of a drawn-out antitrust battle with regulators.
The EC said it accepted the “restorative measures” which require Illumina to restore Grail’s independence to the same level as before the acquisition occurred. However, Illumina’s exact method to divest from Grail was not disclosed. Illumina must also allow Grail to be a “viable and competitive” company after the divestment, with the measure being done within strict deadlines and with “sufficient certainty,” according to European regulators.
“Today’s decision marks another important step towards restoring competition in the market for the development of early cancer detection tests. Illumina’s divestment plan sets out a timely path towards Grail’s independence by ensuring it continues to be a viable competitor in this important innovation race,” Margrethe Vestager, executive vice president in charge of competition policy at the European Commission, said in a statement.
However, Illumina in a statement said while there is “an agreement with the EC on specific divestment options” that “does not mean the method of divestment has been finalized.”
The company said it “continues to explore divesting Grail through either a trade sale or a capital markets transaction, each of which are contemplated by the plan approved today.”
If a capital markets transaction ends up being pursued, Illumina said it must capitalize Grail with two-and-a-half years of funding, which is estimated at approximately $1 billion based on Grail’s long-range plan. Illumina has a goal of finalizing those terms by the end of the second quarter of 2024.
Illumina announced its $8 billion Grail acquisition in 2020. However, the regulatory battle over Illumina’s acquisition of Grail started in 2021, as the EC agreed to review the buy and paused the merger to allow further investigation. That same year, the U.S. Federal Trade Commission also filed a complaint against the buyout, stating that it would violate antitrust regulations.
However, in the middle of regulatory scrutiny on both sides of the Atlantic, the deal was moved forward by Illumina and Grail—an action expressly prohibited by the EC because it “stifle” innovation and “reduce choice” in the blood-based early cancer detection test market.
As a result, the EC fined Illumina €432 million ($459.4 million) and Grail €1,000 ($1,063.53) for going forward with the deal as restorative measures were adopted in October 2023.
In the U.S., the Fifth Circuit Court of Appeals agreed with the FTC that there was evidence that the deal was anti-competitive but that the regulator had applied the wrong legal standard. The Securities and Exchange Commission also announced last year that it was investigating the deal.
Tyler Patchen is a staff writer at BioSpace. You can reach him at tyler.patchen@biospace.com. Follow him on LinkedIn.
