The attempted merger between Illumina Inc. and Grail Inc. has been one of the most significant and controversial cases in recent mergers and acquisitions, reshaping discussions about regulatory oversight, particularly regarding “killer acquisitions.” Here’s an overview of the companies, the legal challenges, and the recent developments surrounding this case.
Companies Involved
Illumina Inc.
Based in San Diego, Illumina is a leader in DNA sequencing and genomic technologies. Its platforms are critical for research and applications in life sciences, oncology, and personalized medicine. Illumina’s technology underpins many genomic diagnostics, including Grail’s liquid biopsy cancer screening tools.
Grail Inc.
Grail, spun off from Illumina in 2016, focuses on early cancer detection through liquid biopsy technology. Its flagship product, Galleri, can detect over 50 types of cancer with a simple blood test. Despite its promising potential, Grail has limited revenue outside the U.S., which became a key point in the regulatory dispute.
The Merger and Legal Disputes
In 2020, Illumina announced plans to reacquire Grail for $8 billion. The deal sparked antitrust scrutiny, particularly in the EU, where Grail’s low turnover meant it fell below typical merger notification thresholds. The European Commission (EC) invoked Article 22 of the EU Merger Regulation (EUMR), a rarely used clause designed to review cases referred by national authorities even if the merger doesn’t meet financial thresholds.
- EU Challenges: The EC blocked the merger in 2022, labeling it a “killer acquisition” that could stifle competition in the emerging cancer diagnostic market. Illumina completed the merger anyway, leading to a €432 million fine for “gun-jumping”—closing the deal before regulatory approval.
- Court Rulings: In September 2024, the European Court of Justice (ECJ) overturned the EC’s decision, ruling that Article 22 was misapplied and that the EC lacked jurisdiction over the merger. This decision undermines the Commission’s ability to review “below-threshold” mergers unless changes are made to EU laws.
- S. Challenges: Parallel cases in the U.S. also raised challenges. After prolonged litigation, the Federal Trade Commission (FTC) ended its opposition following Illumina’s decision to spin off Grail in June 2024. Grail is now an independent public company, with Illumina retaining a minority stake.
Implications and Broader Impact
The Illumina-Grail case highlights the tension between innovation-driven M&A and regulatory oversight:
- “Killer Acquisitions”: The EC’s use of Article 22 aimed to curb acquisitions that might eliminate future competition, especially in tech and biotech. However, the ECJ ruling curtails this approach, emphasizing legal certainty and predictable jurisdictional thresholds.
- Regulatory Reforms: The ECJ decision has sparked calls for revising EU merger regulations to better address emerging markets like biotech and AI. While some Member States have implemented national thresholds for similar cases, a broader overhaul may take years.
- Impact on Companies: While Illumina avoided fines and regained clarity on EU jurisdiction, the lengthy legal battles delayed strategic synergies. For Grail, the spin-off allows independent growth but limits access to Illumina’s broader resources.
Conclusion
The Illumina-Grail merger saga underscores the evolving complexities of global antitrust regulation in innovation-driven industries. As regulators and companies navigate these challenges, the balance between fostering innovation and preventing anti-competitive behavior remains a critical question for the future of M&A.