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By Foo Yun Chee

BRUSSELS (Reuters) - U.S. genetic testing company Illumina (NASDAQ:ILMN) has been ordered by EU antitrust regulators to sell cancer test maker Grail after it completed the deal before securing their approval.

Antitrust watchdogs on both sides of the Atlantic have sharpened their scrutiny of pharma and biotech deals in recent years on fears that some of these may stifle innovation and reduce competition in the sector.

The gun-jumping cost Illumina a record EU antitrust fine of 432 million euros ($457 million) for such an offence.

The EU competition enforcer subsequently blocked the $7.1 billion deal in 2022 on concerns that Illumina would have an incentive to stop Grail's rivals from accessing its technology to develop competing blood-based early cancer detection tests.

"With today's decision, the Commission has adopted restorative measures requiring Illumina to divest Grail and restore the situation prevailing before the completion of the acquisition," the European Commission said in a statement on Thursday, confirming a Reuters story.

The EU watchdog ordered Illumina to restore Grail's independence to the same level as prior to its acquisition and to ensure that it is as viable and competitive as before the takeover.

Illumina can choose to divest Grail via a trade sale, a capital markets transaction or other methods, but must do it within strict deadlines.

The company must keep Grail separate and viable until the sale is completed.

Illumina said that it was currently reviewing the divestment order.

The company has sued the EU watchdog for blocking the deal, its decision to examine the case despite not meeting the EU merger criteria, an order to keep Grail separate so that it can unwind the deal and the gun-jumping decision.

Illumina ordered by EU antitrust regulators to sell Grail