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EU fines Illumina $476 million for jumping gun in takeover of GRAIL

July 12 (UPI) -- The European Union hit U.S. biotech company Illumina with a $476 million fine Wednesday for going ahead with its takeover of cancer-test developer GRAIL, despite the deal being placed on hold and eventually blocked by regulators.

Illumina had "strategically weighed up the risk of a gun-jumping fine" against the risk of a hefty penalty for failing to take over GRAIL and the profit it stood to gain before deliberately choosing to complete the transaction while regulators were still investigating, the European Commission said in a news release.

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"This is a very serious infringement, which requires the imposition of a proportionate fine, with the aim of deterring such conduct. In setting such a fine, the Commission considered Illumina's deliberate strategy and took due account of the hold separate measures adopted by the company as a mitigating circumstance," it said.

The Commission said that it was imposing the maximum legal fine of 10% of San Diego-based Illumina's annual turnover, which approximated to about $476 million.

Menlo Park-based GRAIL was also fined a symbolic $1,100 for its "active role" in the infringement including legal steps to enable the completion of the transaction, knowing the commission's in-depth review was ongoing. The small fine was in recognition of it being the first time the commission had penalized a target company in such a case.

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"EU merger rules require that merging companies do not implement mergers until approved by the Commission -- 'the standstill obligation.' It is a cornerstone of the European merger control system, that enables the Commission to carry out its role before structural changes modify the competitive landscape," said the EC.

The commission blocked Illumina's acquisition of GRAIL in September after a 14-month anti-trust probe of the deal launched after six EU-member states filed a complaint.

The in-depth investigation found the merger would have "significant anticompetitive effects, stifling innovation and reducing choice in the emerging market for blood-based early cancer detection tests.

The EC said it issued its "standstill" notice at the start of its investigation but Illumina pushed ahead regardless, completing the deal on Aug. 18, 2021.

Wednesday's decision confirmed the commission's preliminary view that Illumina and GRAIL "intentionally breached the standstill obligation."

"The Commission found that by closing the transaction Illumina was able to exercise a decisive influence over GRAIL and it actually exercised it."

Illumina, which has the $476 million already set aside in anticipation of the fine, plans to appeal the decision, according to a spokesman.

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