European Commission Orders Unprecedented Unwinding Of Illumina’s Acquisition of GRAIL. For the first time, the European Commission has ordered reversal of a consummated transaction, Illumina Inc.’s 2021 acquisition of GRAIL Inc., a company developing blood tests for cancer detection. The EC’s review of the deal began in April 2021, when it accepted a referral under Article 22 of the EU Merger Regulation from six Member States to review the proposed $7.1 billion transaction, even though it met neither EU nor Member State merger thresholds. The EC was applying its then new March 2021 Guidance on the Article 22 referral process.
In August 2021, Illumina announced that it would complete the acquisition even though the EC had begun an in-depth investigation a month earlier. In September 2022, the EC blocked the acquisition based on vertical competitive concerns, finding that the transaction threatened to impede innovation and limit competition in an emerging market for blood-based early cancer detection tests. Before that decision, the EC had imposed interim measures on the acquisition in October 2021, with the goal of preventing irreversible integration of the company’s assets, and renewed those measures in October 2022. The EC also imposed fines in July 2023, concluding that Illumina and GRAIL had willfully and deliberately infringed the EUMR’s standstill obligation by closing the transaction without first obtaining EC clearance.
On October 12, the EC issued its decision requiring the reversal of the acquisition. The decision requires that Illumina divest GRAIL within 12 months (with a possible three-month extension) to restore the pre-transaction status quo. The decision also requires Illumina to take several measures to maintain GRAIL’s viability pending the divestiture. In the United States, Illumina and GRAIL are currently appealing to the Fifth Circuit an FTC decision that found the transaction violated Section 7 of the Clayton Act on similar grounds as the EC decision.
- Further insight into the EC’s decision is available here.
EC Clears Pfizer’s $43B Acquisition of Seagen. The EC has cleared Pfizer’s $43 billion acquisition Seagen, which was announced in March 2023. The EC reviewed the transaction after a referral by three Member States under Article 4(5) of the EU Merger Regulation, which allows that mergers that are wider that national in geographic scope and that arise in a number of Member States can be reviewed by the Commission more broadly. Article 4(5) is an avenue by which the merging parties may request Commission review beyond the mechanism provided for by Article 22, which allows for Commission review where a merger affects trade between Member States or threatens competition within the territory of the Member State or States. In a press release, the EC explained that Pfizer’s acquisition of Seagen’s antibody drug conjugates (ADCs) technology does not threaten competition, but instead allows Pfizer to “to diversify its portfolio and accelerate the development and commercialisation of Seagen’s ADCs drugs,” which is complementary to Pfizer’s current product portfolio. The EC said that it found no material threat of (1) “discontinuation, delay or re-orientation of the parties' ongoing and overlapping lines of research or pipeline projects” or (2) “loss of innovation resulting from a structural reduction of the overall level of innovation.”
Indivior Settles Long-Running Alleged Product-Hopping Claims. Drugmaker Indivior announced on October 23 that it had entered a $385 million settlement with direct purchasers of its Suboxone opioid addiction treatment, just ahead of a trial scheduled for October 30. If approved, the settlement would end the last part of multidistrict litigation that also involved claims brought by 42 states and end-payor insurers, both of which had previously been settled. The plaintiffs accused Indivior of introducing a dissolvable-strip formulation for Suboxone just as its patent exclusivity period over the pill version of the drug was about to expire, leading users of the drug to “hop” to the film product and forestalling generic competition for the pill version. Alleged “product hopping” schemes have recently become a focus of the FTC, which issued a report in October 2022 describing its efforts in this area, including two FTC settlements regarding the same alleged conduct described above.
