EU Blocks Illumina’s Deal to Buy Grail on Antitrust Grounds

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Investing.com — The European Union has blocked Illumina’s (NASDAQ:ILMN) $7.1 billion acquisition of cancer detection test maker Grail, saying that Illumina failed to address its concerns about the deal restricting competition.

Illumina said immediately it will appeal the ruling, which would force it to unwind the deal that it closed in August last year. At the same time, it added it would consider other strategic alternatives for the unit, in the event that its appeal fails.

Illumina has held Grail, whose technology can screen asymptomatic patients for more than 50 types of cancer, as a separate company while EU’s review played out. 

“Illumina can make Grail’s life-saving multi-cancer early detection test more available, more affordable, and more accessible – saving lives and lowering healthcare costs,” general counsel Charles Dadswell said in a statement by the company.

Illumina’s stock rose 4.0% in premarket trading in response to the news. 

In her ruling, EU Competition Commissioner Margrethe Vestager had taken a very different opinion, echoing the concerns of the U.S. Federal Trade Commission. The FTC has also initiated an administrative review of the deal, despite a ruling from the agency’s chief administrative judge that the merger would not harm competition.

“With this transaction, Illumina would have an incentive to cut off Grail’s rivals from accessing its technology, or otherwise disadvantage them,” Vestager said. “It is vital to preserve competition between early cancer detection test developers at this critical stage of development,” she added, noting that Illumina had failed to put forward any remedies to address the Commission’s concerns. 

The Commission deemed Illumina “currently the only credible supplier of a technology allowing to develop and process” the cancer tests that Grail and others are striving to develop. 

The FTC had voted unanimously in March last year to file suit to stop Illumina buying out its former subsidiary, arguing that it would restrict innovation. However, it had dismissed its federal court lawsuit only five months later, arguing the federal court case was no longer needed since the EU was investigating. The FTC still went ahead with its administrative proceeding.