This week, TechFreedom filed an amicus brief urging the U.S. Court of Appeals for the Fifth Circuit to reverse the Federal Trade Commission’s (FTC) decision ordering Illumina to unwind its acquisition of Grail, the only company to have come to market with a blood test that detects multiple types of cancer in asymptomatic persons. In its decision, the Commission failed to show that any firm other than Grail has a reasonable probability of entering the market and commercializing a multi-cancer early detection (MCED) test. The Commission also overlooked evidence, and its own previous guidance, that shows vertical mergers may reasonably be expected to generate efficiencies—and should not be subjected to the same standards courts have applied in horizontal merger cases. 

“The Commission’s opinion, if not reversed, has implications that reach far beyond its decision in this matter,” said Bilal Sayyed, TechFreedom Senior Competition Counsel, former Director of the FTC’s Office of Policy Planning and a 25-year veteran antitrust lawyer. “It would substantially chill the vertical integration that helps new or innovative firms bring their products or technologies to market, either directly or through incorporation into existing products. This has been the growth path for thousands of small companies in the last decade, especially in technology, pharmaceutical, and medical device markets.” 

“The Commission has not proven cognizable harm in the relevant product market,” he continued. “In finding a harm to potential or future competition, the Commission ignores the requirements of the potential competition doctrine. Illumina’s alleged future competitors in a market for commercialized MCED tests meet neither the test for imminent entry nor probable entry; nor does the Commission even try to show imminence or reasonable probability of entry.” 

“The Commission’s evaluation of Illumina’s efficiency claims was insufficient and biased,” Sayyed said. “The Commission’s evaluation is inconsistent with the theoretical and empirical work showing vertical mergers may reasonably be expected to generate efficiencies and are less likely to have anticompetitive effects than horizontal mergers because they do not eliminate direct competitors. Illumina has identified the potential for significant efficiencies associated with the transaction. While neither the Commission nor the Court must accept Illumina’s assertions at face value, the Commission ignores and cherry-picks evidence in the record to confirm its previously expressed and predetermined bias against efficiency claims.”

“The Commission’s skepticism of Illumina’s Open Offer is inconsistent with the agency’s ongoing practice of accepting similar commitments,” Sayyed concluded, referring to Illuminaʼs proposed 12-year supply commitment (the ‘Open Offer’). “The Commission had no reasonable basis for indicating that Illumina’s Open Offer was insufficient to address the Commission’s alleged potential harms to competition. A review of the FTC’s consent orders shows it has frequently accepted such orders in vertical mergers that are non-structural and based on commitments similar to those in Illumina’s Open Offer. While it is significant that an order is enforceable by the Commission, and a contract between Illumina and a third party is not, Illumina offered to enter into an enforceable order with the Commission consistent with its Open Offer.”

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About TechFreedom: TechFreedom is a nonprofit, nonpartisan technology policy think tank. We work to chart a path forward for policymakers towards a bright future where technology enhances freedom, and freedom enhances technology.

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