Illumina wins battle against US regulators trying to block $8bn Grail deal

An administrative law judge has ruled in favour of biotech Illumina’s $8bn acquisition of cancer screening start-up Grail, dealing a blow to the US Federal Trade Commission’s attempts to unpick the transaction.

Illumina, a gene sequencing company, said in a statement that it had “received a favourable decision” from the judge presiding over the case, who had “rejected” the agency’s argument that the deal would hurt competition in the nascent market for early cancer detection tests.

“As we’ve stated from the outset, this transaction is procompetitive, will advance innovation, lower healthcare costs and save lives. We are pleased that, after considering the evidence, the [judge] has reached the same conclusion,” said Charles Dadswell, general counsel of Illumina.

The FTC declined to comment on the decision, which has not yet been made public.

Illumina’s victory is a blow to the FTC, which sought to block the tie-up in 2021 just weeks before Lina Khan was appointed to chair the agency. Since her installation, she has taken a zealous approach to targeting monopolies, particularly in the technology space.

The agency argued the deal would have a negative effect on innovation and competition in the cancer industry, testing a novel legal theory that a supplier buying a customer would damage the market for other potential buyers of its products and services.

Illumina, which founded Grail before spinning it off in 2016, sells gene sequencing services to the cancer testing group.

The ruling provides a temporary reprieve for Illumina, which has been fighting regulatory battles on both sides of the Atlantic. The FTC can appeal against the judge’s decision, with a final ruling on the merger being decided by the agency’s five commissioners, three of whom are Democrats.

That would set the stage for a battle in federal court, where judges almost never block companies pursuing so-called vertical mergers.

Illumina’s victory comes ahead of a showdown in Brussels, expected next week, where regulators are likely to block the deal on the grounds that it will harm rivals.

European regulators are able to block the transaction because they recently defeated Illumina’s effort to prevent them from investigating the deal. A judge ruled in July against Illumina’s claim that the EU did not have jurisdiction to scrutinise the merger because Grail does not generate revenues in Europe.

“Reuniting Illumina and Grail will transform the detection and treatment of cancer by facilitating widespread, affordable access to Grail’s life-saving . . . test,” said Francis deSouza, Illumina’s chief executive.