Illumina Inc.’s $7 billion takeover of cancer-test provider Grail Inc. was vetoed by the European Union amid concerns that the deal would have hampered competition.
The European Commission, the bloc’s merger watchdog, said in a statement the deal would have “stifled innovation and reduced choice” in the emerging market for blood-based early cancer detection tests. Illumina, whose proposed remedies were deemed insufficient, said it plans to appeal the veto.
“Illumina is currently the only credible supplier of a technology allowing to develop and process these tests,” EU Antitrust Commissioner Margrethe Vestager said in the statement. “With this transaction, Illumina would have an incentive to cut off Grail’s rivals from accessing its technology, or otherwise disadvantage them.”
The deal has been mired in regulatory controversy on both sides of the Atlantic. Grail was spun off from DNA sequencing giant Illumina in 2016 to develop a blood test to detect 50 types of early stages of cancer. Illumina sought to buy back the startup and provoked authorities by closing the deal in August 2021 despite pending investigations.
“We are disappointed with the European Commission’s decision prohibiting us from acquiring Grail back to Illumina,” said Charles Dadswell, general counsel of the company. “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.”
Vestager said that Grail is “in a race” with other companies to develop the tests, and if successful, they “will revolutionize our fight against cancer and help to save millions of lives.”
But, she said, “it is vital to preserve competition” between developers “at this critical stage of development” and “as Illumina did not put forward remedies that would have solved our concerns, we prohibited the merger.”
She said remedies that were offered were so complex, that “it would have been hard for market participants and the commission to monitor and enforce Illumina’s compliance.”
They included an offer aimed to clear the way for a new supplier to emerge, with a “patent peace” promise, meaning that Illumina would stop patent lawsuits against the Chinese competitor BGI Genomics, for three years.
Illumina will now need to “undo the effects of its actions and unwind the acquisition,” Vestager said. “I intend to suggest in due course a separate decision ordering Illumina and Grail to dissolve the transaction and restore Grail’s independence.”
The EU warned in July that jumping the gun by closing the deal early was “a serious breach” of procedures and could spark “hefty fines.”
Illumina won a temporary boost last week when it defeated a U.S. Federal Trade Commission lawsuit seeking to unwind the acquisition after an administrative judge ruled the tie-up didn’t violate antitrust law.
The FTC, which is weighing its next steps, argued the deal threatens to slow progress toward earlier cancer diagnosis, as Grail’s rivals also rely on Illumina’s sequencing services.
The company in July lost an EU court case seeking to topple the commission’s decision to review the deal, arguing the watchdog has no jurisdiction over it and that a potential veto would delay the rollout of cancer tests in the region by many years. Illumina said it’s appealing the court ruling.
EU deal vetoes are rare. In January it banned Hyundai Heavy Industries Co.’s bid for Daewoo Shipbuilding & Marine Engineering Co. But that was more than two years after it toppled Thyssenkrupp AG’s bid for Tata Steel Ltd.
The EU’s antitrust arm sparked a political row with France and Germany for thwarting Siemens AG and Alstom SA’s project to create a European rail giant.
