US antitrust regulator orders Illumina, $8bn Grail deal to be unwind

Illumina has been ordered by the Federal Trade Commission to sell cancer screening company Grail. Illumina argued that the acquisition of $8bn would hurt competition in the US market for lifesaving tests.

This decision reverses an earlierdecision by an administrative law judge in favor of the deal. It is the latest setback for the San Diego-based company trying to diversify into the emerging market for multi-cancer early detection testing.

On Monday, the US antitrust regulator issued an opinion. It found that Illumina’s decision to purchase Grail, which it had originally spun out in 2016, would decrease innovation in the domestic oncology market while increasing prices and decreasing the choice and quality. Illumina’s claims that the acquisition would speed up the rollout Grail’s oncology testing and save lives was rejected by the regulator. It also noted that Illumina’s projections were “vague and self-serving and unsupported”.

“This is very concerning, given the importance to quickly develop effective and affordable tools for early detection of cancer,”

Illumina stated that it will file a petition to review the acquisition promptly with a US Court of Appeals. The appeal will be treated expeditiously. According to the company, the FTC’s order to cancel the acquisition will be automatically stopped pending appeal.

FTC’s ruling follows an similar move made by European regulators to unpick Illumina’s acquisition of Grail. Despite opposition from the European Commission, FTC and others, Grail was closed by the world’s largest gene sequencing company in August 2021.

Illumina will be fined up to 10% of its annual turnover by the commission and issued a final divestment orders within the next few days.

Illumina’s fight with antitrust regulators has sparked an activist investor battle with Carl Icahn. He claims that the deal cost Illumina as much as $50bn.

Monday’s Icahn criticism of Illumina’s decision not to close the Grail agreement was repeated. He also called for Francis deSouza, the chief executive, to be fired.

“We find it unconscionable that Mr deSouza is still being entrusted by the board of directors with managing our potential great company. Icahn wrote to shareholders that the company has lost $50bn in shareholder value during his tenure. Many of his highly-skilled executives have also left or are about to leave.

An administrative judge sided in favor of Illumina in September over the acquisition Grail. Grail had claimed that the deal would not harm competition. The Monday FTC order and opinion overturned that ruling.

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