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Judge rules in favor of Illumina, countering FTC concerns over Grail merger

Genetic testing firm Illumina’s $7.1 billion acquisition of its former subsidiary Grail can’t be unwound by U.S. regulators, a federal administrative judge ruled in a decision released Thursday.

Illumina is still facing a challenge from European regulators that could force it to undo the deal and potentially pay hundreds of millions of dollars in fines.

Regulators argue that consolidation of the two firms would decrease competition and harm consumers. In March 2021, the U.S. Federal Trade Commission filed an administrative complaint saying the deal would “harm competition in the U.S. market for life-saving multi-cancer early detection tests.”

Illumina has defended its acquisition of Grail, which develops cancer tests. The firms closed the merger before receiving approval from the FTC and its European Union counterpart, which is still reviewing the transaction.

In a Thursday statement announcing the decision, Illumina said the judge rejected the FTC’s position that the deal would stifle competition.

“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 ALJ has reached the same conclusion,” Charles Dadswell, Illumina’s general counsel, said in a statement, referring to the administrative law judge.

The FTC did not respond to requests for comment by publication.

The dispute is an important test case for the FTC, which under current chair Lina Khan has outlined a more muscular approach to antitrust regulation, particularly in the technology and life sciences sectors. A recent meeting convened by the agency suggested that pharmaceutical mergers could receive closer scrutiny, for instance.

Illumina valued the deal at $8 billion when it was announced in September 2020, a total which included the value of shares in Grail then held by Illumina.

Grail was spun out of Illumina in 2016. Its Galleri blood test is intended to screen for multiple types of cancer. Illumina has said merging the two companies will ease access to the Galleri test, including obtaining regulatory approval and insurance reimbursement, and scaling production and distribution of the test.

The Wall Street Journal first reported the judge’s decision earlier on Thursday.