EU blocks $7.1bn takeover of cancer detection company

Illumina bid would have “stifled innovation” | EU said Illumina was the "unrivalled supplier” of next-generation sequencing systems for genetic and genomic analysis.

The European Commission have vetoed Illuminas’ $7.1 billion acquisition of Grail, a cancer detection company that was previously spun out of Illumina.

On Tuesday, September 6, the European Commission said that the merger would have “stifled innovation, and reduced choice in the emerging market for blood-based early cancer detection tests” and Illumina’s offered remedies weren’t sufficient to address these concerns.

Executive vice-president Margrethe Vestager, in charge of competition policy, said: “With this transaction, Illumina would have an incentive to cut off Grail’s rivals from accessing its technology, or otherwise disadvantage them.

“It is vital to preserve competition between early cancer detection test developers at this critical stage of development. As Illumina did not put forward remedies that would have solved our concerns, we prohibited the merger.”

Illumina announced its plans to acquire Grail—a company backed by investors including Amazon founder Jeff Bezos and philanthropist Bill Gates—in September 2020.

The European Commission said that Illumina is currently the "unrivalled supplier” of next-generation sequencing (NGS) systems for genetic and genomic analysis.

According to the European Commission, this position would give Illumina the “ability and the incentive to engage in foreclosure strategies” against Grail’s rivals, who are dependent on Illumina’s technology.

“It could for instance refuse to supply its NGS systems to GRAIL's rivals, increase the prices, or degrade quality and delay supplies,” said the release from the regulator, adding that these strategies would result in a detrimental effect on competition.

Illumina’s proposed remedies, which included licence open to NGS suppliers to some of Illumina's  NGS patents and a commitment to stop patent lawsuits in the US and Europe against the NGS supplier BGI Genomics for three years, didn’t adequately address the competition concerns.

“The patent licence would have only had a limited impact because the covered patents were due to expire in the short term, and because Illumina has many other patents that competitors would need to develop an alternative NGS system,” said the European Commission.

Illumina said it was reviewing the order and intends to appeal the decision, noting that the European Commission’s conclusion follows last week's ruling by US Federal Trade Commission (FTC) judge in favour of Illumina's acquisition of Grail.

Charles Dadswell, general counsel of Illumina, said: "We are disappointed with the European Commission's decision prohibiting us from acquiring Grail back to Illumina.

“As we continue to believe, this merger is pro-competitive and will accelerate innovation. Last week the chief judge of the FTC issued a decision supporting Illumina acquiring Grail.”

Illumina will now begin reviewing strategic alternatives for Grail in the event the divestiture is not stayed pending Illumina's appeal.

The company is also appealing a July 2022 decision by the EU General Court regarding the European Commission's jurisdiction to challenge the Grail deal.

Did you enjoy reading this story?  Sign up to our free daily newsletters and get stories sent like this straight to your inbox.