On October 29, 2021, for the first time, the Commission imposed interim measures on companies that closed a deal before obtaining merger approval. On August 18, 2021, U.S. gene-sequencing company Illumina publicly announced it had acquired Grail, a start-up that has developed multi-cancer early detection tests.The Commission had taken jurisdiction to review the transaction on April 19, 2021,[1] and started an in-depth investigation on July 22, 2021, with a final decision expected by February 4, 2022. The announcement therefore suggested that the parties implemented a transaction which was still under review. This would amount to a violation of the standstill obligation, commonly referred to as “gun-jumping.”

In a statement of objections issued on September 20, 2021, the Commission notified Illumina and Grail of their alleged breach. In these circumstances, the Commission has the power to adopt interim measures to restore and maintain effective competition.[2] While it has never done so in the past, in a decision dated October 29, 2021, the Commission ordered that, until the conclusion of the merger review process:

  • Grail stay separate from Illumina and be run by an independent manager;
  • the two companies do not exchange confidential business information, except where required by law or as justified by their supplier-customer relationship;
  • Illumina finance additional funds necessary for the operation and development of Grail;
  • the companies interact at arm’s length, in line with industry practice, meaning without unduly favoring Grail over its rivals; and
  • Grail actively prepare for a scenario in which the deal is blocked and has to be

A monitoring trustee—to be approved by the Commission—will monitor compliance. If the companies do not comply, they face penalty payments of up to 5% of their average daily turnover and/or fines of up to 10% of their annual worldwide turnover.[3] Eventually, if the Commission concludes that the companies did in fact breach merger rules by “jumping the gun,” they could face a separate fine of up to 10% of their annual worldwide turnover.

The Commission has previously imposed heavy fines on companies for gun-jumping. In June 2019, Canon was fined €28 million for failing to notify and await clearance before implementing its acquisition of TMSC,[4] and in September 2021, the General Court largely upheld a €124.5 million fine on Altice for breach of the standstill obligation.[5]

The Commission’s interim measures decision in Illumina/Grail underscores its recent tough stance against gun-jumping practices. Prudent companies will heed this warning, and avoid premature implementation of a transaction, instead awaiting the outcome of the Commission’s investigation.

[1] As reported in our April 2021 EU Competition Law Newsletter. On April 19, 2021, the Commission accepted a referral request by the French competition authority of the acquisition and asked Illumina to notify the transaction. This marked the first effective upward referral of a transaction that meets neither national nor EU merger control thresholds (under Article 22 EUMR). While Illumina’s appeal against the Commission’s decision to take jurisdiction is pending before the General Court, the Commission is reviewing the transaction within the merger control deadlines. Illumina v Commission (Case T-227/21), case pending.

[2] Article 8(5)(a) EU Merger Regulation (“EUMR”).

[3] Articles 14 and 15 EUMR. Illumina has appealed the Commission’s interim measures order to the EU courts.

[4] Canon/Toshiba Medical Systems Corporation (Case COMP/M.8179), Commission decision of June 17, 2019, as reported in the June 2019 and October 2019 editions of our EU Competition Law Newsletter.

[5] Altice v European Commission (Case T-425/18) EU:T:2021:607, as discussed in our Alert Memorandum of November 19, 2021.