Illumina Slapped With Over €400M In Fines: European Commission Penalizes Company For Hasty Grail Deal

The European Commission has fined Illumina Inc ILMN and Grail Inc approximately €432 million and €1,000, respectively, for implementing their proposed merger before approval by the commission, in breach of EU merger control rules.

"This is a very serious infringement, which requires the imposition of a proportionate fine, with the aim of deterring such conduct," the European Commission said.

Illumina has already reserved $453 million (10% of 2022 turnover) for a possible maximum fine, according to a regulatory filing from earlier this year, allowed under EU merger rules for such infringements. 

A command for Illumina to divest the deal with Grail might be issued later this year.

An Illumina spokesperson said the company would appeal the fine. The spokesperson said the European Commission's decision, while expected, is "unlawful, inappropriate and disproportionate."

Billionaire investor Carl Icahn, who owns 1.4% of the company, had also urged Illumina to unwind the Grail deal, which he called a risky acquisition. 

This case is the first instance where the commission utilized new powers, established in 2021, to scrutinize takeovers of startups with little or no revenue, which were previously overlooked despite posing a competition risk.

In April, the Fed­er­al Trade Com­mis­sion or­dered Il­lu­mi­na to di­vest Grail, saying that the deal would stifle competition and innovation in the U.S. market for cancer tests. However, Republican lawmakers, state attorneys general, and some advocacy groups have supported the deal.

Last month, Illumina's CEO Francis deSouza resigned, marking a victory for Carl Icahn, who clarified that he wanted management change with former CEO Jay Flatley to return and Grail divested.

Price Action: ILMN shares are up 0.10% at $185.00 during the premarket session on the last check Wednesday.