BRUSSELS—The European Union blocked Illumina acquisition of cancer-test developer Grail Inc., putting a $7.1 billion merger into jeopardy just days after a U.S. administrative law judge allowed it to go forward.

The bloc’s antitrust regulator said Tuesday the purchase would stifle innovation and reduce choice in an emerging market for early cancer-detection blood tests. The decision could prompt Illumina, a maker of gene-sequencing machines, to shed Grail just over a year after scooping it up.

This post first appeared on wsj.com

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