IO Case

1.

IlLumina and Grail
Case: Story of a
Great Deal with a
Bad End
By Dzhaloliddin Isomitdinov & Vlad Khryapin
2024

2.

Presentation Structure
1 ⃣ Company Overview
2 ⃣ Deal Details
3 ⃣ FTC Actions
4 ⃣ Timeline of Proceedings
5 ⃣ Analysis of Impacts
6 ⃣ Coordinated Effects
7 ⃣ Conclusion

3.

Illumina
● Founded: 1998, San Diego, California
● Focus: Genomic sequencing technologies for
DNA/RNA analysis
● Key Products: Sequencing machines like NovaSeq
and NextSeq

4.

Grail
● Founded: 2016, Menlo Park, California
● Focus: Blood tests for early cancer detection
● Key Product: Galleri test detects over 50 cancer types via
blood samples

5.

Why Deal Mattered
Market Impact
● Could transform cancer diagnostics by combining
top sequencing tech with advanced tests
Innovation vs. Competition
● Aim to boost innovation but risks reducing
competition if Illumina controls key tech
Broader Implications
● Sets a precedent for biotech mergers, influencing
future deals and regulatory actions

6.

Deal Details
Illumina planned to acquire Grail for $8 billion
Goal: Strengthen Illumina’s position in cancer
diagnostics

7.

FTC Actions
1 ⃣ Complaint Filed:
● FTC formally opposed the
merger, citing anticompetitive risks
2 ⃣ Legal Action:
● Argued the deal would
reduce competition and
harm consumers

8.

FTC Allegations
Erosion of Competition
The merger could eliminate Grail as
an independent competitor
Coordinated Effects
Fewer competitors could lead to
price coordination and reduced
output
Impact on Consumers
Higher prices and fewer choices for
life-saving cancer diagnostics

9.

FTC’s Main Arguments
1 ⃣ Consumer Harm
Less choice for cancer detection tests
Potential price increases
2 ⃣ Impact on Innovation
Illumina’s dominance may reduce incentives to develop new technologies
3 ⃣ Regulatory Precedents
Past antitrust cases show competition is crucial in healthcare and biotech

10.

Timeline of the Illumina-Grail Merger Case
1 ⃣ September 2020: Illumina announces plans to buy Grail for $8 billion to improve
cancer testing
2 ⃣ March 2021: FTC starts investigating the deal to see if it will hurt competition
3 ⃣ January 2022: FTC officially tries to block the deal, worried it will harm consumers
4 ⃣ February 2022: FTC holds hearings with experts and competitors about the merger
5 ⃣ June 2022: FTC rules against the merger, saying it could create unfair market
control
6 ⃣ August 2022: Illumina appeals, arguing the merger will boost cancer testing
progress
7 ⃣ During 2023: Legal battles continue, and the final decision is still unclear

11.

Industry Reactions to the Merger
Competitor
Concerns
Support
for FTC
Future
Impact

12.

Coordinated Effects: Definition
Coordinated effects happen when, after a
merger, firms find it easier to align their
actions (like prices) without direct
communication

13.

Coordinated Effects: How happens
Firms monitor each other more easily
They share similar pricing or cost strategies
Past behaviors (like parallel pricing) set the
stage

14.

Coordinated Effects: Result
Higher prices or
reduced competition
without explicit
collusion

15.

Coordinated Effects in the Illumina-Grail
Merger
1 ⃣ FTC Concerns:
● Market concentration could enable price alignment,
harming competition
● Illumina’s dominance might influence competitors to
follow its lead
2 ⃣ Impacts on Consumers:
● Fewer competitors = higher prices for cancer diagnostics
● Reduced innovation and limited access to important tests

16.

Coordinated Effects in the Illumina-Grail
Merger
3 ⃣ Barriers for New Players:
● Harder for new firms to compete due to Illumina’s control
over key tech
4 ⃣ FTC's Stand:
● Past cases show mergers like this lead to harm
● Analysis confirmed risks to competition and innovation

17.

Conclusions: Why It Matters
Ensures fair competition, fostering
innovation and keeping medical technologies
accessible

18.

Conclusions: Key Takeaways
Competition drives progress and affordability
Mergers need clear market analysis to avoid
harming consumers
Transparency and collaboration with
regulators are essential

19.

Conclusions: Future Outlook for Market
More innovation from independent players in
cancer diagnostics
Stricter rules for biotech mergers to protect
competition
Focus on affordable and accessible early
detection tests