Illumina's $8 Billion Acquisition of GRAIL
Deal Overview
Acquirer: Illumina Inc.
Target: GRAIL
Total transaction size: $~8 billion ($3.5 billion cash, $4.5 billion Illumina common stock)
Closed date: 18 August 2021
Illumina and GRAIL announced on 21 September 2020 that Illumina would reacquire GRAIL in a vertical merger: Illumina is the key upstream supplier of next-generation sequencing systems and inputs, while GRAIL was developing downstream MCED blood tests. Illumina framed the strategic rationale as accelerating GRAIL’s commercialisation and scaling patient access by combining GRAIL’s MCED capabilities with Illumina’s manufacturing, global reach, and clinical infrastructure.
The deal was valued at $8 billion at closing, structured as $3.5 billion cash + $4.5 billion in Illumina stock, along with contingent value rights tied to future GRAIL revenues. Illumina stated that, post-closing, GRAIL would operate as a standalone division within Illumina with a dedicated leadership team. Public statements around the announcement also underscored leadership continuity, and Illumina shareholders were expected to own the vast majority of the combined company.
Company Details: Acquirer – Illumina
Illumina was founded in 1998 and rapidly established itself as a pioneer in genomic analysis technologies. The company’s trajectory shifted decisively in 2007 with the acquisition of Solexa, which brought next-generation sequencing technology into Illumina’s portfolio and cemented its position as the leading supplier of DNA sequencing systems worldwide. Through successive product launches, regulatory approvals for clinical use, and targeted acquisitions, Illumina expanded beyond research-only applications into clinical and population-scale genomics, achieving a dominant market share in sequencing by the mid-2010s. Illumina also pursued selective vertical expansion, including the spin-off of GRAIL in 2015 to develop blood-based cancer detection tests, while continuing to supply critical sequencing inputs across the life sciences ecosystem. By 2020, Illumina had both entrenched upstream market power and increasing downstream ambitions, culminating in its proposed reacquisition of GRAIL in 2020, which set the stage for the subsequent EU merger control dispute. Prior to the acquisition announcement in September 2020, Illumina was a publicly traded company with a market capitalisation of around USD $45 billion.
Company Details: Target – GRAIL
GRAIL was founded in 2015 as a biotechnology start-up focused on developing blood-based tests for early cancer detection, leveraging advances in next-generation DNA sequencing. The company emerged from Illumina’s ecosystem as a spin-off supported by Illumina’s sequencing technology and scientific expertise, with its research direction strongly influenced by Richard Klausner, Illumina’s former Chief Medical Officer and former Director of the US National Cancer Institute. Operating in the emerging multi-cancer early detection (MCED) space, GRAIL’s competitive significance lay in its innovation potential rather than existing revenues. Illumina retained a significant minority stake following the spin-off and announced an agreement to reacquire GRAIL in September 2020, prompting regulatory scrutiny despite GRAIL’s limited commercial footprint. As a private start-up, GRAIL did not have a public market capitalisation. However, under the acquisition agreement, Illumina was going to acquire GRAIL for cash and stock consideration of $8 billion upon closing of the transaction.
Legal Contentions
Regulatory Risks
The proposed acquisition raised significant competition concerns, primarily because it was a vertical merger linking Illumina’s dominant upstream position in next-generation DNA sequencing with GRAIL’s downstream activity in the emerging market for MCED tests. Illumina supplied sequencing systems and consumables that were regarded as critical inputs for most MCED developers, giving rise to concerns that post-merger it would have both the ability and incentive to foreclose rivals by degrading access, increasing prices, delaying innovation, or prioritising GRAIL in technical support and product development. These risks were compounded by the fact that the MCED market was still nascent, meaning that competitive harm would likely manifest as reduced innovation rather than immediate price effects.
European Commission Investigation
The deal also soon gave rise to a contentious dispute concerning EU merger control procedure and compliance. Although the transaction fell below the EU’s turnover thresholds, several Member States requested a referral under Article 22 EU Merger Regulation (EUMR), which permits the Commission to review non-notifiable mergers that risk significantly affecting competition within the referring States. The Commission accepted the referral, triggering an in-depth investigation. Illumina nevertheless closed the transaction on 18 August 2021, stating that GRAIL would operate on a stand-alone basis pending regulatory and legal outcomes.
In October 2021, the Commission imposed legally binding interim measures requiring the parties to remain separate. Illumina challenged the Commission’s jurisdiction, but in July 2022 the General Court dismissed the challenge (Case T-227/21), allowing the review to proceed. The Commission subsequently prohibited the acquisition in September 2022, finding that it would significantly impede effective competition by enabling Illumina to foreclose rival MCED developers through its upstream position. The dispute escalated in July 2023, when the Commission imposed a record gun-jumping fine of approximately €432 million on Illumina. In October 2023, it ordered restorative measures requiring divestment of GRAIL, with Commission oversight continuing into 2024 as Illumina’s appeals progressed to the Court of Justice of the European Union.
Impact
On 3 September 2024, the CJEU issued its judgment on Illumina’s acquisition of Grail. The CJEU held that the Commission lacked jurisdiction to investigation the transaction and had overstepped the limits of Article 22 EUMR by asserting jurisdiction over a transaction that was not notifiable at EU level and did not fall within the merger control jurisdiction of any referring Member State. In doing so, the CJEU rejected the Commission’s policy-driven attempt to use Article 22 as a general “call-in” mechanism for below-threshold transactions, particularly in innovation-heavy sectors.
It should be noted that the judgment did not endorse the merger on its substantive merits. Instead, the Court’s intervention was confined to Member States’ jurisdictional competence. From a doctrinal perspective, the Court can be seen as following existing merger control principles rather than departing from them. EU merger control has traditionally been built on clear, turnover-based jurisdictional thresholds, reflecting concerns about legal certainty, predictability, and institutional competence. While Article 22 has long allowed referrals from Member States, the Court emphasised that it was never intended to create EU jurisdiction where none existed at national level. In this sense, the judgment reaffirmed the structural logic of the EUMR and underscored that enforcement objectives, such as capturing “killer acquisitions”, cannot justify stretching jurisdictional provisions beyond their intended scope. Any broader reform must therefore come from the legislature rather than judicial or administrative reinterpretation.
Following Illumina/GRAIL, the Commission can no longer use Article 22 EUMR to review below-threshold mergers unless the referring Member State itself has jurisdiction under national law or lacks a merger control regime altogether. This shifts regulatory risk from a single, centralised EU review to a fragmented landscape of national call-in regimes. As a result, business face increased regulatory uncertainty, particularly for cross-border innovation-driven deals.
Future Implications
In response to the judgment, the Commission has signalled that it is considering future reforms to address perceived enforcement gaps. Potential options include lowering turnover thresholds, introducing transaction-value thresholds, or creating an EU-level call-in power. However, each option raises concerns about administrative burden and legal uncertainty, echoing the criticisms levelled at the Commission’s expansive use of Article 22.
The Commission has identified two strategic directions:
Amending the EUMR to introduce a safeguard mechanism allowing review of below-threshold mergers under defined conditions; or
Relying on Member States to expand their national jurisdiction, enabling referrals under a more traditional interpretation of Article 22.
Both approaches shift responsibility back to legislative reform rather than administrative interpretation.
NCAs may also increasingly rely on non-merger competition powers to scrutinise non-notifiable transactions. The Towercast judgment confirmed that acquisitions can, in limited circumstances, be reviewed under Article 102 TFEU as abuses of dominance. However, this route is ex post and remedial, rather than ex ante and preventative like merger control, and applies only where the acquirer is already dominant, thus limiting its effectiveness as a substitute for merger control.
Despite these limits, NCAs are expected to use their expanded enforcement toolkits more actively. Authorities such as the French competition authority have explicitly committed to combining merger control with traditional antitrust enforcement to address potential competition risks, suggesting increased scrutiny at national level.
Conclusion
The practical consequences of the Illumina judgment have yet to fully unfold, particularly as regards the extent to which transactions may fall outside the reach of EU merger control. The ruling raises a series of complex and interrelated questions that the incoming European Commission will need to address. While the decision has been welcomed by dealmakers for understandable reasons, it also warrants caution in light of the regulatory uncertainty it may generate.
In the wake of the judgment, the Competition Commissioner has already indicated that the Commission will seek ways to address the renewed enforcement gap. Notably, several major jurisdictions, including the United States, the United Kingdom, and China, already operate or are considering residual jurisdiction mechanisms such as call-in powers. This development highlights the growing importance of international coordination in assessing mergers with potentially global competitive effects but uneven regional impacts, as illustrated by the Illumina/GRAIL transaction.
References
Birmingham, K. et al. (2020). Press Release. [online]. Available at: https://investor.illumina.com/news/press-release-details/2020/Illumina-to-Acquire-GRAIL-to-Launch-New-Era-of-Cancer-Detection/default.aspx
Birmingham, K. et al. (2021). Illumina to Acquire GRAIL to Launch New Era of Cancer Detection. [online]. Available at: https://investor.illumina.com/news/press-release-details/2021/Illumina-Acquires-GRAIL-to-Accelerate-Patient-Access-to-Life-Saving-Multi-Cancer-Early-Detection-Test/default.aspx
Ferrie, D. & Tsoni, M. (2022). Mergers: Commission prohibits acquisition of GRAIL by Illumina. [online]. Available at: https://ec.europa.eu/commission/presscorner/detail/es/ip_22_5364
Illumina Inc. v European Commission, General Court, 13 July 2022. [online]. Available at: https://curia.europa.eu/juris/liste.jsf?jur=T&language=en&lgrec=fr&num=T-227%2F21&td=%3BALL
Podesta, A. & Simonini, S. (2023). Mergers: Commission fines Illumina and GRAIL for implementing their acquisition without prior merger control approval. [online]. Available at: https://ec.europa.eu/commission/presscorner/detail/en/ip_23_3773
Podesta, A. & Tsoni, M. (2021). Mergers: Commission adopts interim measures to prevent harm to competition following Illumina's early acquisition of GRAIL. [online]. Available at: https://ec.europa.eu/commission/presscorner/detail/en/ip_21_5661
Zuber, L. & Simonini, S. (2024). Commission approves Illumina's plan to unwind its completed acquisition of GRAIL. [online]. Available at: https://ec.europa.eu/commission/presscorner/detail/en/ip_24_1964