The European Union has suffered a sharp setback in antitrust and corporate concentration matters. This is the summary of the historic ruling by the Court of Justice of the European Union regarding the merger between Illumina, a multinational specializing in genetic sequencing, and Grail, a company that develops blood tests for early diagnosis of cancer. Both companies are headquartered in the United States.
According to the judges of the EU’s highest court, the European Commission, which blocked and then fined Illumina’s attempted acquisition of Grail, has overstepped its bounds. Brussels’ powers to examine mergers and global agreements between companies have more limited boundaries, the ruling certifies. This is a serious blow for the European executive, which will now have to review its strategy on competition and relations with multinationals.
Illumina and Grail merger project
In September 2020, Illumina, an American company specializing in genetic analysis solutions, submitted a plan to acquire sole control of Grail, a company that develops blood tests for the early diagnosis of cancer. The European Commission examined the plan because it “could affect trade between Member States and threaten to significantly affect competition within their territory.”
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The EU executive’s antennas were activated by a request presented by the French competition authority, which was also joined by the authorities of Belgium, Greece, Iceland, Norway and the Netherlands. “With this transaction, Illumina would have an incentive to prevent Grail’s rivals from accessing its technology, or at least to disadvantage them,” said Competition Commissioner Margrethe Vestager at the time. “Since Illumina did not propose solutions that would have addressed our concerns, we prohibited the merger,” concluded the Danish commissioner, calling for a slowdown in the development of useful tools for citizens’ health.
The block on the merger by Brussels
Illumina, supported by Grail, had decided to appeal, but it was initially rejected by the European Court in September 2022. The Commission then imposed a fine of 476 million dollars on the genetic sequencing giant for having concluded the acquisition of Grail in early 2023 before obtaining the green light from Brussels. The fine had sounded like a warning to companies that dared to violate antitrust rules regardless of their place of operation. Faced with a new appeal by Illumina, this time the judges of the EU Supreme Court ruled in favor of the American company, annulling both the previous ruling and the sanctions adopted by the Commission.
Limits to the control of corporate concentrations
According to the judges, the General Court had reached a wrong conclusion during the first trial, based on a misinterpretation of the rules on corporate mergers. In particular, the judges stressed, Brussels could not have examined the merger because “not only is it not of European dimension”, but “it escapes their competence in matters of control, because it does not reach the applicable national thresholds”.
According to the Court, the overly broad interpretation of the Court of First Instance “risks upsetting the balance between the different objectives pursued” by the regulation on the control of concentrations between undertakings. The basis for the fine was therefore removed. The Federal Trade Commission (FTC) of the United States had also intervened in the case of the acquisition. As highlighted in a press release issued by Illumina, in August 2024 the commissioners of the FTC also closed the case. At the moment, Grail is a spin-off of Illumina, i.e. an independent public company, in which the DNA sequencing giant maintains a minority stake of 14.5%.
Why Illumina is so important in the health field
The biotechnology company Illumina, founded in San Diego in 1998, specializes in next-generation sequencing (NGS) of DNA, capable of sequencing millions of genetic fragments simultaneously. This technology was invented about two decades after chemist Frederick Sanger and his colleagues introduced the first method for sequencing DNA molecules. NGS technology is now used in multiple applications, from cancer research to pathogen identification, even helping in studies related to the human microbiome. Thanks to its cutting-edge skills, Illumina has quickly become a “DNA giant” attracting the attention of the Swiss multinational pharmaceutical company Roche, which a few years ago offered 5.7 billion dollars to buy it.
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The US company rejected the offer at the time to avoid losing dominance in its reference market. In recent years, Illumina has undertaken a strategy of expanding its services. Among the pro bono programs launched by the company is iHope, a specific genomic test for children suspected of having rare diseases. Its global expansion has also brought it to Italy, where at the end of 2021 it opened its only Italian office in Milan, where it installed a center dedicated to genomic research and applications of genomic sequencing, in order to constitute a driving force for healthcare innovation in Europe.
