EU says Illumina risks hefty fine for jumping gun on Grail deal

By Foo Yun Chee and Jan Strupczewski

BRUSSELS (Reuters) -U.S. life sciences firm Illumina risks a hefty fine for jumping the gun and closing its takeover of Grail without waiting for official approval, EU antitrust chief Margrethe Vestager said on Tuesday.

Vestager issued her warning a week after Europe’s second-highest court endorsed her power to review mergers even if companies do not have activities in Europe or fall below the turnover threshold.

Illumina angered the European Commission when it completed the acquisition of Grail, a U.S.-based biotechnology company, in August last year amid the ongoing EU investigation into the deal.

The EU competition watchdog subsequently ordered the company to keep Grail separate and to have independent managers run the company until an EU decision.

The Commission said on Tuesday it had sent a statement of objections, or charge sheet, to the companies.

“If companies jump the gun and implement deals that are subject to our review, they undermine the effective functioning of our EU merger control system. This is a serious breach of the standstill obligation,” Vestager said in a statement.

“Illumina and GRAIL have openly done so by implementing their deal while the Commission is still carrying out its in-depth investigation. This could result in hefty fines,” she said.

Illumina said: “Illumina will continue its efforts to persuade the Commission that its merger with GRAIL is pro-competitive and in the best interests of patients in Europe and elsewhere.”

Fines can reach up to 10% of a company’s global turnover. Illumina can defend itself in writing and also ask for a closed-door hearing to present its arguments before the Commission makes a final decision.

Separately, the EU watchdog resumed its investigation into the deal, setting a Sept. 9 deadline for its decision.

Illumina offered concessions, which included price cuts and allowing rivals access to its technologies, last July but did not manage to convince regulators, people familiar with the matter told Reuters earlier this year.

By resuming its investigation, the Commission is likely to seek feedback from rivals and customers on the concessions before it decides whether to clear or block the deal.

(Reporting by Jan Strupczewski; Editing by Paul Simao)