Illumina Inc. won a US Federal Trade Commission lawsuit seeking to unwind its $7 billion acquisition of cancer-startup Grail Inc. after an administrative judge ruled the tie-up didn’t violate antitrust law, the company said.
(Bloomberg) — Illumina Inc. won a US Federal Trade Commission lawsuit seeking to unwind its $7 billion acquisition of cancer-startup Grail Inc. after an administrative judge ruled the tie-up didn’t violate antitrust law, the company said.
The FTC said it’s reviewing the decision and evaluating next steps. The agency last year sued in its in-house court to block the merger, which it alleged would harm innovation for early-stage cancer detection tests.
“Reuniting Illumina and GRAIL will transform the detection and treatment of cancer,” Illumina’s Chief Executive Officer Francis deSouza said. “This decision is a step toward making that vision a reality.
Illumina shares closed down less than 1% at $200.62, after falling more than 5% earlier.
Grail was spun off from DNA sequencing giant Illumina in 2016 to develop a blood test to detect 50 types of early stages of cancer. Illumina sought to buy back the startup and closed the deal in August 2021 despite the FTC’s case and a still-pending EU investigation.
The decision by Administrative Law Judge Michael Chappell is preliminary and likely to be appealed to the FTC’s five commissioners, who can vote to uphold or overturn his ruling.
The ruling by Chappell, an agency in-house judge since 1999, marks the second time he’s decided against the FTC this year, noted William Kovacic, a former FTC chair who teaches antitrust at George Washington University Law School. In February, Chappell sided with Altria Group against the FTC’s challenge of the company’s 2018 investment in Juul Labs. The FTC is appealing that decision.
Illumina’s victory may be shortlived — the agency’s commissioners have always reversed Chappell’s decisions when he rules against the FTC, Kovacic noted.
An EU merger review of the deal remains pending, though news reports have said European regulators are likely to block the acquisition. The European Commission found in July that Illumina breached the bloc’s merger rules by completing the Grail takeover before gaining regulatory approval.
Illumina had also sought to block the EU from reviewing its deal, but lost a separate court fight to overturn the commission’s decision to use new powers, adopted last year, to review takeovers of low- or zero-revenue targets that previously sneaked under the antitrust radar despite posing a risk to competition. The company plans to appeal that decision.
Illumina said this month that it has set aside $453 million to pay a potential EU fine for closing the deal before the regulatory review finished.
(Updates with FTC comment in second paragraph, analysis of decision in eighth, and ninth paragraphs)
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