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European Commission to investigate acquisition of pharmaceutical firm GRAIL by biotech firm Illumina

The European Commission will investigate the acquisition of US pharmaceutical company GRAIL by US biotechnology company Illumina. Various European countries, including the Netherlands, support France’s request to the European Commission to investigate this acquisition. Illumina and GRAIL manufacture, among other products, products for tests for detecting cancer at a very early stage. The Netherlands Authority for Consumers and Markets (ACM) has concerns that this acquisition may be harmful to competition, and may lead to higher prices, reduced quality, or less innovation in the Netherlands and the European Union.

Martijn Snoep, Chairman of the Board of ACM, explains: ‘GRAIL is a small company with no turnover. However, GRAIL does have promising technologies and products for early detection of cancer. It is remarkable that Illumina is willing to spend billions of euros on this acquisition. There are examples in the pharmaceutical industry and digital economy that suggest that these kinds of acquisitions may have negative long-term effects on innovation. That is why we are glad that the European Commission is prepared to assess this acquisition.’

GRAIL and Illumina had asked a Dutch provisional-relief judge to prohibit the Netherlands from joining France’s request to the European Commission. The court turned down the US companies’ request.

Why is this case so important?

In both the pharmaceutical industry and in sectors related to the digital economy, ACM sees a trend of larger companies buying up smaller, often innovative companies. In that way, larger companies are able to manufacture and bring to market innovative products faster. However, there are also risks associated with such practices, as they can also eliminate future competition. Subsequently, it may be easier for large companies to drive up prices or reduce quality. It can also be harmful to innovation. As a result of such acquisitions, new developments that are spearheaded by these smaller companies will take place either later or not even at all. ACM finds it important that, with regard to the acquisition at hand, attention is paid to ensuring a well-functioning market for people and businesses, now and in the future.

Why will the European Commission launch this investigation?

It is not mandatory to notify competition authorities of each and every merger or acquisition. Only if the merging companies meet certain turnover thresholds will they be required to notify regulators of their merger or acquisition plans before going through with them. In this particular case, the turnover thresholds set by ACM as well as those set by the European Commission have not been met. However, if a member state has serious concerns, and there is no European notification obligation, European countries will then have the opportunity to request the European Commission to launch an investigation anyway. The European Commission explained again recently how this referral process works. This planned acquisition is also assessed in countries outside of Europe. For example, the US has also launched a further investigation into the proposed acquisition. 

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