Brussels fines Illumina and Grail, owned by Bezos and Gates, 432 million for merging despite their veto

At the end of 2020, the American biotechnology laboratory, Illumina, closed an acquisition agreement with the startup Grail, owned by Jeff Bezos and Bill Gates, for 8,000 million dollars, about 6,800 million euros. However, the operation has raised doubts in the EU. So much so that, after vetoing the transaction in September 2022, the European Commission has fined both companies 432 million euros for executing the purchase without its approval.

According to the decision announced this Wednesday, the European Commission will impose a penalty of 432 million euros on the biotech firm and another 1,000 euros on the startup specializing in the diagnosis of colon cancer. What they are accused of is that the companies have executed the merger without the operation being approved by the Community Executive. Sufficient reason for Brussels to impose a fine of up to 10% of a company’s turnover, based on the Community regulation on mergers.

The vice-president of the European Commission and responsible for Competition, Margrethe Vestager, has spoken about it, criticizing: “if the companies merge before our authorization, they violate our rules.” In a further step, the Danish has pointed out that the actions of Illumina and Grail were “deliberate” while the European Commission continued to investigate.

“Today’s decision to fine both companies, for a total amount of 432 million euros, shows that this is a very serious infringement,” added Vestager.

Illumina and Grail “knowingly” and “intentionally” breached their obligations during the in-depth investigation by the European Commission, Brussels has considered. This is an “unprecedented” and “very serious” offense that “undermines the effective functioning of concentration control in the EU”, the Community Executive has justified the imposition of fines.

Brussels had already focused on the delaying tactics launched by Illumina to prevent the European Commission from ruling on whether the world’s largest genomic sequencing company should divest from Grail.

If the acquisition was announced in 2020, in July 2021 the European Commission opened an in-depth investigation to, two months later, block the operation. It considered that it would have repercussions on competition, that it would restrict innovation and the possibilities of choosing tests for early detection of cancer through blood tests.

However, already in August of that year and before Brussels had closed its investigation, Illumina publicly announced that it had completed the acquisition of the startup. All the necessary paperwork was settled and the corresponding amounts were paid to the shareholders for their Grail titles. An action that led the European Commission to present a statement of objections to both companies for executing the concentration before the Community Executive concluded its analysis and investigation.

Brussels has specified in its argument that Illumina “strategically” assessed the risk of a fine for not waiting for the analysis of the Community Competition authority. He weighed between this option and having to pay a high premium if he didn’t buy Grail. According to the European Commission, the US company also assessed the potential benefits of skipping the Competition procedure, even if it was ultimately forced to divest from the startup. Subsequently, it closed an agreement while the Community Executive was investigating an operation that, finally, it prohibited.

“This is a very serious infraction, which requires the imposition of a proportionate fine, with the aim of stopping this conduct,” Brussels considered.

For his part, Grail was aware of his obligations and “played an active role in the offence.” An action that the European Commission has exemplified with the adoption of legal measures to allow the transaction in the knowledge of the investigation that the Community Executive had underway.

However, Brussels has decided to impose a symbolic penalty of 1,000 euros on Grail since it is the first time that it has fined an acquired company for skipping the community authorization process for an operation.