On Wednesday 12 July, the European Commission announced that it had imposed a heavy fine in the amount of around €432 million on Illumina Inc. (United States) and €1,000 to GRAIL (United States) for “ knowingly and deliberately” breaching the standstill obligation established by Article 7(1) of Regulation 139/2004 on the control of concentrations between undertakings by continuing with their merger without prior authorisation from the Commission and in the course of an in-depth investigation. The Commission has described this infringement as “very serious”.
The case
After signing an agreement to acquire GRAIL on 20 September 2020 in order to operate in the emerging market for blood-based tests for the early detection of cancer, Illumina announced on 18 August 2021 that it had completed the acquisition of GRAIL. This announcement was made while the Commission was conducting an in-depth investigation and without its prior authorisation.
The Commission opened an in-depth investigation into the proposed acquisition on 22 July 2021 (see EUROPE 12768/19).
Consequently, on 20 August, the Commission opened a separate investigation into a possible breach of the suspension obligation (see EUROPE 12774/20).
In the meantime, the Commission adopted interim measures on 29 October 2021 to restore the conditions of effective competition (see EUROPE 12824/11).
Following a statement of objections issued to Illumina on 19 July 2022, the Commission prohibited Illumina’s acquisition of GRAIL on 6 September that same year (see EUROPE 13015/1) on the grounds that the transaction would affect competition in the relevant market.
Subsequently, the Commission communicated its objections to the two companies on 5 December 2022 in order to unwind the disputed acquisition (see EUROPE 12768/19).
In parallel, in its judgment of 13 July 2022, the General Court of the EU dismissed in its entirety Illumina’s appeal against the European Commission’s decisions in April 2021 to declare itself competent to examine the transaction in question (case T-123/22) (see EUROPE 12992/27).
Fines
The Commission found that Illumina had “strategically weighed the risk of being fined for gun jumping” and then decided to proceed with the transaction during the investigation.
The Commission considers the infringement to be “very serious”, although it considers that Illumina benefits from mitigating circumstances, having implemented measures to maintain the distinction between the two companies.
The Commission set the fine at 10% of the company’s turnover (i.e. approximately €432 million), as it is authorised to do under the merger regulation.
Furthermore, although the Commission considers that GRAIL knowingly played an active role in the infringement, it has decided to impose only a symbolic fine on the company. This is the first time that the Commission has imposed a fine for “gun jumping” on a company involved in a merger.
The Commission is now preparing a final decision on the dissolution of the operation.
Link to case: https://aeur.eu/f/813 (Original version in French by Émilie Vanderhulst)