European Commission Announces Interim Measures to Avert Possibly Irreversible Consequences of Grail's Acquisition by Illumina
The European Commission (the Commission) announced today that it adopted interim measures to prevent Illumina from implementing its acquisition of Grail (see, attached press release). The move is in response to Illumina’s decision to acquire Grail pending the Commission’s review of that transaction under Regulation 139/2004 on the control of concentrations between undertakings (the Merger Regulation)(see, Van Bael & Bellis Life Sciences News & Insights of 21 September 2021). According to the Commission, Illumina is in breach of Article 7 of the Merger Regulation which imposes a standstill obligation on concentrations notifiable under the Merger Regulation. These must not be implemented until after the Commission has approved them.
The Commission’s interim measures require Illumina to keep Grail separate and to have it run by an independent “Hold Separate Manager”. Additionally, Illumina and Grail are, subject to exceptions, prohibited from sharing confidential business information. Business interactions between the parties should occur at arm’s length, but Illumina should provide funding to Grail. Lastly and significantly, Grail is required to “work on alternative options to the transaction” to prepare for the possibility that the transaction has to be undone following the Commission’s merger review. Compliance with the interim measures will be monitored by a Monitoring Trustee. Commissioner Vestager claimed that the interim measures were designed to allow Grail and others to “continue developing their innovative cancer detection technology”.
The Commission pointed out that interim measures of this nature are a first and were necessary to tackle what it described as “an unprecedented early implementation of a concentration”. Not surprisingly, the Commission did not mention that its review of the transaction is in itself controversial and subject to legal review. This is because the transaction does not meet any of the thresholds for review under the Merger Regulation or national merger control laws (see, Van Bael & Bellis Life Sciences News & Insights of 22 April 2021, 7 May 2021, and 24 August 2021).
Today’s Commission decision does not interfere with existing procedural tracks, including the Commission’s substantive review of the transaction, the Commission’s inquiry into a possible breach by the parties of the standstill obligation and the parties’ challenge of the Commission’s review of the transaction before the General Court of the European Union.