Though Illumina said goodbye to Grail this past summer—after butting heads for years with antitrust regulators and activist investors, while enduring heavy fines and orders to split—the European Union’s highest court now says the company may have had a point from the beginning.
The European Court of Justice has ruled in favor of Illumina’s appeal, saying the European Commission did not have the jurisdiction to evaluate or block its multibillion-dollar plans to acquire the cancer blood test developer.
The case dates back to one of Illumina’s first legal challenges, where it posited that, because Grail was conducting no business in Europe at the time, the commission’s competition watchdogs should not have the power to investigate the deal.
The EC originally took up the case after receiving requests from the national regulatory authorities of Belgium, France, Greece, Iceland, the Netherlands and Norway; its ultimate findings would end up mirroring the eventual conclusion of the U.S. Federal Trade Commission—that Illumina’s ownership of Grail could tempt it to wield its massive market share in DNA sequencing, and throttle back the research of its rivals in cancer screening.
While its case was making its way through EU courts—and before officials on both sides of the Atlantic completed their assessments of the acquisition’s effects on competition—Illumina moved forward with closing the Grail deal, re-acquiring the company that began life as its spinout in 2016.
By jumping the regulatory gun, Illumina received a record 432-million-euro fine—equal to about 10% of the company’s annual turnover, the maximum allowed by EU law—for what the commission described as flaunting its standstill rules. Grail, for its part, took a symbolic 1,000-euro slap on the wrist.
But now, in something of a consolation prize, Illumina said the court’s final decision has annulled the basis for the hefty financial penalty, and that it “will no longer be payable.”
“Today's judgment confirms Illumina's longstanding view that the European Commission exceeded its authority by asserting jurisdiction over this merger,” the company said in a statement.
Still, Illumina will have to settle for its current 14.5% ownership of Grail. The company made its decision to divest last December, following a ruling by a U.S. appeals court—which, to Illumina’s credit, also found the FTC had applied an “erroneous legal standard” in its analysis and vacated the agency’s order.
However, that panel of judges left the door open for the FTC to reconsider its approach, saying that the agency “had substantial evidence to support its conclusion” and that its antitrust concerns were valid. Illumina said it would not pursue an additional appeal to the Supreme Court, and the FTC dismissed its case against Illumina in mid-August after Grail became an independent company.
Today, the European Court of Justice reversed a ruling by its lower General Court that had dismissed Illumina’s challenge, saying it had incorrectly allowed the commission to field requests from national competition authorities even though the proposed acquisition did not meet the necessary legal thresholds—namely, specific amounts of annual business being performed within the country.
Going forward, the commission said it will continue to accept referrals of acquisition deals for review when the legal requirements are met.
According to Margrethe Vestager, the EC’s executive vice president in charge of competition policy, since Illumina first filed its lawsuit in 2021, several EU member states have introduced provisions that have broadened their ability to request international reviews, in cases where a deal may have a significant competitive impact.
Vestager also said that “certain transactions that do not reach EU notification thresholds may nonetheless be harmful to competition in Europe,” and that the commission will consider its next steps to ensure its ability to review those cases in light of the ECJ ruling.
“A company with limited turnover may still play a significant competitive role on the market, as a start-up with significant potential or as an important innovator. Killer acquisitions seek to neutralize small but promising companies as a possible source of competition,” she said in a statement. “These companies' size is often dwarfed by the large corporations that seek to acquire them, and they should be protected against the risk of elimination.”