Illumina-GRAIL in Retrospect

In 2023, the Antitrust Agencies released updated Merger Guidelines. These Guidelines outline policies and procedures in enforcing § 7 of the Clayton Act as it relates to horizontal, vertical, and complementary mergers. In this paper, we consider the application of these guidelines to a recently challenged vertical merger: the Illumina-GRAIL merger. The FTC found the merger to be anticompetitive; and on appeal, the Fifth Circuit Court of Appeals largely agreed. While we show that the positions taken by the FTC are consistent with the Guidelines, we provide an economic analysis that reveals that these positions and the subsequent judicial decision are inconsistent with economic theory, fail to protect competition, and fail to promote consumer welfare. Consequently, the Merger Guidelines may deter procompetitive mergers and lead the Agencies astray in their enforcement efforts.