Steven C. Salop analyzes the Fifth Circuit Court’s opinion accepting the Federal Trade Commission’s suit to block Illumina’s acquisition of Grail. The ruling sheds light on how courts may approach vertical merger analysis and “litigating the fix” in the future, and what this may mean for the Merger Guidelines’ approach to vertical mergers.
Grail and its competitors are developing tests which will save perhaps millions of lives. They will detect many different types of cancer very early—if they ever exist. All these tests need Illumina’s instruments. The FTC, reversing an administrative law judge, said Illumina could not buy Grail. If it did, the FTC said, it would not let Grail’s competitors use its instruments. Illumina has appealed, saying, among other things, that since the tests do not exist there is, for antitrust purposes, currently no market. Yet while the tests may or may not exist in the future the Fifth Circuit has to decide this case now.
The publication of the Stigler Center at
The University of Chicago Booth School of Business
ProMarket is dedicated to discussing how competition tends to be subverted by special interests.
The posts represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
For more information, please visit ProMarket Policy.