FTC Mandates Illumina to Divest Grail Acquisition Due to Antitrust Concerns

The Federal Trade Commission (FTC) mandated Illumina to divest Grail, its $8 billion acquisition of a cancer-testing firm that utilizes Illumina's gene-sequencing technology for early cancer detection. This decision was expected, causing Illumina's stock to decline and the broader market to show a slight downturn.

In a landmark move to protect competition and foster innovation in the market for life-saving cancer tests, the Federal Trade Commission (FTC) has mandated Illumina, Inc. to divest Grail, Inc., a leading competitor in multi-cancer early detection (MCED) tests [1]. The decision, which reverses an earlier administrative law judge's dismissal of antitrust charges, comes as a response to concerns that the acquisition would stifle competition and result in higher prices, decreased choices, and reduced quality for consumers.

Grail, founded in 2016, is a pioneer in developing non-invasive, early detection liquid biopsy tests that can screen for multiple types of cancer in asymptomatic patients using DNA sequencing [1]. The company's innovative tests have the potential to revolutionize cancer detection by offering early detection for most types of cancer, which are currently not screened for at all. Grail's success is largely attributed to Illumina's next-generation sequencing (NGS) platforms, which are utilized to analyze genetic material from blood samples drawn for MCED tests.

The FTC's primary concern is that the acquisition would diminish innovation in the U.S. market for MCED tests while increasing prices and decreasing choices for consumers [1]. Illumina's dominant position in the market, coupled with its control over NGS platforms, would enable the company to foreclose access to critical inputs, such as NGS platforms and services, for Grail's competitors [1]. As a result, these competitors would struggle to compete effectively, and consumers would be left with fewer choices and potentially higher prices for life-saving cancer tests.

Additionally, the FTC highlighted the importance of fostering competition in the MCED market, given the significant implications for public health [1]. Swiftly developing effective and affordable tools to detect cancer early is crucial, and the loss of competition could hinder progress in this area.

Illumina's past behavior also raised concerns for the FTC. For example, the company reportedly provided Grail with special pricing and other advantages, suggesting a potential for anticompetitive behavior [1]. These actions, combined with Illumina's significant financial incentive to ensure Grail's success, further underscore the need for divestiture to preserve competition and promote innovation in the MCED market.

The FTC's order to divest Grail is expected to have a slight impact on Illumina's stock and the broader market [1]. However, the long-term implications for the MCED market and consumers are significant, as this decision will help preserve competition and foster innovation in the development of life-saving cancer tests.

[1] + https://www.ftc.gov/news-events/news/press-releases/2023/04/ftc-orders-illumina-divest-cancer-detection-test-maker-grail-protect-competition-life-saving