Case: 23-60167 Document: 119-1 Page: 1 Date Filed: 06/12/2023
`
`No. 23-60167
`__________________________________________________________________
`IN THE
`United States Court of Appeals
`FOR THE FIFTH CIRCUIT
`
`ILLUMINA, INC. AND GRAIL, INC.,
`
` v.
`FEDERAL TRADE COMMISSION,
`
`Petitioners,
`
`Respondent.
`
`On Petition for Review from the Federal
`Trade Commission (Docket Number 9401)
`
`BRIEF OF 34 MEMBERS OF CONGRESS AS
`AMICI CURIAE IN SUPPORT OF PETITIONERS
`
`Steven Cernak
`BONA LAW PC
`28175 Haggerty Road
`Novi, MI 48377
`(248) 994-2221
`
`Aaron Gott
`BONA LAW PC
`331 2nd Avenue S., #420
`Minneapolis, MN 55401
`(612) 284-5001
`
`Luke Hasskamp
`Luis Blanquez
`BONA LAW PC
`4275 Executive Square, Suite 200
`La Jolla, CA 92037
`(858) 964-4589
`
`Patrick Pascarella
`BONA LAW PC
`100 Crescent Court, #700-3425
`Dallas, TX 75201
`(469) 296-7716
`
`Counsel for Amici Curiae
`
`
`
`No. 23-60167
`__________________________________________________________________
`IN THE
`United States Court of Appeals
`FOR THE FIFTH CIRCUIT
`
`ILLUMINA, INC. AND GRAIL, INC.,
`
` v.
`FEDERAL TRADE COMMISSION,
`
`Petitioners,
`
`Respondent.
`
`On Petition for Review from the Federal
`Trade Commission (Docket Number 9401)
`
`BRIEF OF 34 MEMBERS OF CONGRESS AS
`AMICI CURIAE IN SUPPORT OF PETITIONERS
`
`Steven Cernak
`BONA LAW PC
`28175 Haggerty Road
`Novi, MI 48377
`(248) 994-2221
`
`Aaron Gott
`BONA LAW PC
`331 2nd Avenue S., #420
`Minneapolis, MN 55401
`(612) 284-5001
`
`Luke Hasskamp
`Luis Blanquez
`BONA LAW PC
`4275 Executive Square, Suite 200
`La Jolla, CA 92037
`(858) 964-4589
`
`Patrick Pascarella
`BONA LAW PC
`100 Crescent Court, #700-3425
`Dallas, TX 75201
`(469) 296-7716
`
`Counsel for Amici Curiae
`
`
`
`Case: 23-60167 Document: 119-1 Page: 2 Date Filed: 06/12/2023
`
`CERTIFICATE OF INTERESTED PERSONS*
`
`I certify that the following listed persons and entities have an
`
`interest in this case’s outcome as described in Fifth Circuit Rule 28.2.1.
`
`These representations are made so that the judges of this Court may
`
`evaluate possible disqualification or recusal.
`
`Party
`
`Counsel
`
`Illumina, Incorporated
`Petitioner
`
`GRAIL Incorporated, now
`known as GRAIL, L.L.C.
`Petitioner
`
`Federal Trade Commission
`Respondent
`
`Washington Legal
`Foundation
`Amicus Curiae
`Americans for Prosperity
`Foundation
`Amicus Curiae
`34 Members of Congress*
`Amici Curiae
`
`David R. Marriott, Sharonmoyee
`Goswami, Christine A. Varney, Jesse
`M. Weiss, Michael J. Zaken, Antony L.
`Ryan, Benjamin A. Atlas
`Cravath, Swaine & Moore LLP
`
`Gregory G. Garre, Michael G. Egge,
`Marguerite M. Sullivan, Anna M.
`Rathbun, David L. Johnson, Alfred C.
`Pfeiffer
`Latham & Watkins LLP
`
`Anisha S. Dasgupta, Joel Marcus-Kurn,
`Matthew M. Hoffman
`Federal Trade Commission
`
`John M. Masslon II, Cory L. Andrews
`Washington Legal Foundation
`
`Michael Pepson
`Americans for Prosperity Foundation
`
`Luke Hasskamp, Patrick Pascarella,
`Steven Cernak, Luis Blanquez, Aaron
`Gott
`Bona Law PC
`
`
`
`i
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`Case: 23-60167 Document: 119-1 Page: 3 Date Filed: 06/12/2023
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`
`
`
`
`
`
`
`
`
`
`
`
`June 12, 2023
`*See Appendix for list of Amici Curiae
`
`
`
`
`
`
`
`
`
`BONA LAW PC
`/s/ Luke Hasskamp
`LUKE HASSKAMP
`
`ii
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`Case: 23-60167 Document: 119-1 Page: 4 Date Filed: 06/12/2023
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`TABLE OF CONTENTS
` CERTIFICATE OF INTERESTED PERSONS .......................................... i
` TABLE OF AUTHORITIES ................................................................................ iv
`INTEREST OF AMICI CURIAE ............................................................... 1
`INTRODUCTION ...................................................................................... 2
`ARGUMENT .............................................................................................. 7
`THE MAJOR QUESTIONS DOCTRINE PRECLUDES
`I.
`THE FTC FROM UNWINDING THIS TRANSACTION ....... 7
`A. The FTC’s Obstruction of the Illumina-Grail
`Merger Is an Action of Economic and Political
`Significance Triggering the Major Questions
`Doctrine ......................................................................... 10
`B. The FTC Exceeded the Limited Authority Granted
`to It by Congress Under the FTC and Clayton Acts .... 11
`C. The FTC Botched the Necessary Market Analysis
`Required Under the Clayton Act ................................. 14
`II. THE FTC IS NOT ACTING CONSISTENTLY WITH
`THE DIRECTIVES OF THE CLAYTON ACT ...................... 16
`CONCLUSION ............................................................................................ 26
`CERTIFICATE OF COMPLIANCE .......................................................... 1
`CERTIFICATE OF SERVICE .................................................................... 1
`APPENDIX ............................................................................................. A-1
`
`
`
`
`iii
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`
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`Case: 23-60167 Document: 119-1 Page: 5 Date Filed: 06/12/2023
`
`TABLE OF AUTHORITIES
`Page(s) Cases
`Ala. Ass’n of Realtors v. HHS,
` 141 S. Ct. 2485 (2021) ........................................................................... 9
`Brown Shoe Co. v. United States,
`370 U.S. 294 (1962) ...................................................... 12–13, 15, 17–18
`Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.,
`429 U.S. 477 (1977) .............................................................................. 12
`FTC v. Arch Coal, Inc.,
`329 F. Supp. 2d 109 (D.D.C. 2004) ................................................ 18–19
`FTC v. HJ Heinz, Co.,
`246 F.3d 708 (D.C. Cir. 2001) .............................................................. 18
`FTC v. Whole Foods Mkt., Inc.,
`548 F.3d 1028 (D.C. Cir. 2008) ............................................................ 18
`Gundy v. United States,
`139 S. Ct. 2116 (2019) ............................................................................ 8
`United States v. AT&T,
`310 F. Supp. 3d 161 (D.D.C. 2018) .......................................... 19–23, 25
`United States v. AT&T, Inc.,
`916 F.3d 1029 (D.C. Cir. 2019) ...................................................... 19–20
`United States v. E.I. duPont de Nemours & Co.,
`353 U.S. 586 (1957) ........................................................................ 14–15
`United States v. Gen. Dynamics Corp.,
`415 U.S. 486 (1974) .............................................................................. 15
`United States v. Penn-Olin Chem. Co.,
`378 U.S. 158 (1964) .............................................................................. 18
`West Virginia v. EPA,
`142 S. Ct. 2587 (2022) ........................................................................ 7–9
`
`
`
`iv
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`Case: 23-60167 Document: 119-1 Page: 6 Date Filed: 06/12/2023
`
`Constitutional Provisions
`U.S. Const. art. I, § 1 .................................................................................. 8
`Statutes and Rules
`15 U.S.C. §§ 12–27 .................................................. 7, 10, 14, 16–17, 19, 26
`15 U.S.C. §§ 41 et seq. ..................................................................... 2, 10–13
`Pub. L. No. 117-328, 136 Stat. 4459 (2022) ............................................. 10
`Fed. R. App. P. 29 ....................................................................................... 1
`Other Authorities
`51 Cong. Rec. 11,113 (1914) (Remarks of Sen. Reed) ............................... 2
`Centers for Disease Control and Prevention, National Center
`for Health Statistics, FastStats, https://www.cdc.gov/nchs/
`faststats/leading-causes-of-death.htm ................................................ 10
`Comm’r Christine S. Wilson, Dissenting Statement
`Concerning the Notice of Proposed Rulemaking for the
`Non-Compete Clause Rule (Jan. 5, 2023),
`https://www.ftc.gov/legal-library/browse/cases-
`proceedings/public-statements/dissenting-statement-
`commissioner-christine-s-wilson-concerning-notice-
`proposed-rulemaking-non .................................................................. 3–4
`Comm’r Christine S. Wilson, Dissenting Statement
`Regarding the Policy Statement Regarding the Scope of
`Unfair Methods of Competition under Section 5 of the
`Federal Trade Commission Act (Nov. 10, 2022),
`https://www.ftc.gov/legal-library/browse /cases-
`proceedings/public-statements/dissenting-statement-of-
`commissioner-wilson-on-policy-statement-regarding-
`section-5 .................................................................................................. 3
`Concurring Opinion of Comm’r Christine S. Wilson (Apr. 3,
`2023), https://www.ftc.gov/system/files/ftc_gov/pdf/d09401
`wilson concurringopinion.pdf ....................................................... 12–13
`
`v
`
`
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`Case: 23-60167 Document: 119-1 Page: 7 Date Filed: 06/12/2023
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`Fact Sheet: President Biden Reignites Cancer Moonshot
`to End Cancer as We Know It (Feb. 2, 2022), https://www.
`whitehouse.gov/briefing-room/statements-releases/2022/
`02/02/fact-sheet-president-biden-reignites-cancer-
`moonshot-to-end-cancer-as-we-know-it/ ............................................. 10
`Herbert Hovenkamp, Competitive Harm from Vertical
`Mergers, Fac. Scholarship at Penn Carey L. (Oct. 24,
`2020) ..................................................................................................... 13
`Remarks by Comm’r Maureen K. Ohlhausen, Regulatory Humility
`in Practice before the American Enterprise Institute
`(Apr. 1, 2015), https://www.ftc.gov/system/files/documents/public
`statements/635811/150401aeihumilitypractice.pdf ............................. 2
`S. Rep. No. 1775, 81st Cong., 2d Sess., Amending an Act
`entitled: An Act to supplement existing laws against
`unlawful restraints and monopolies, and for other
`purposes (Oct. 15, 1914) (38 Stat. 730) ............................................... 17
`William Eskridge Jr., Interpreting Law: A Primer on How to
`Read Statutes and the Constitution (2016) ........................................... 8
`
`
`
`vi
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`Case: 23-60167 Document: 119-1 Page: 8 Date Filed: 06/12/2023
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`INTEREST OF AMICI CURIAE1
`
`Amici curiae are 34 Members of Congress—2 Senators and 32
`
`Members of the House of Representatives. (See Appendix for List of
`
`Amici.) Amici have a special interest both in ensuring that federal
`
`administrative agencies faithfully act within the scope of authority
`
`delegated to them by Congress and in protecting the physical health and
`
`safety of their constituents and all Americans.
`
`Amici believe that the FTC’s decision to block the Illumina-Grail
`
`merger flagrantly exceeds the authority delegated by Congress, and
`
`seriously threatens the health and well-being of Americans by hindering
`
`the development of potentially life-saving cancer detention technology.
`
`Accordingly, Amici respectfully urge this Court to reverse the FTC’s
`
`decision and render judgment for Illumina and Grail.
`
`
`This brief is submitted under Federal Rule of Appellate Procedure
`1.
`29(a) with the consent of all parties. Undersigned counsel for amici curiae
`certifies that this brief was not authored in whole or part by counsel for
`any of the parties; no party or party’s counsel contributed money for the
`brief; and no one other than amici and their counsel have contributed
`money for this brief.
`
`1
`
`
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`Case: 23-60167 Document: 119-1 Page: 9 Date Filed: 06/12/2023
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`INTRODUCTION
`
`The Federal Trade Commission’s power is not without limit. Section
`
`5 of the FTC Act confines the FTC’s power to stopping “unfair methods of
`
`competition.” This does not include remaking a sector of the economy.
`
`The FTC Commissioners must observe the limits imposed by Congress,
`
`not act as though their “power [is] more arbitrary than that possessed by
`
`any king or potentate on earth.” 51 Cong. Rec. 11,113 (1914) (Remarks of
`
`Sen. Reed).
`
`The current FTC disregards these congressionally mandated and
`
`court defined limits, no longer evincing the regulatory humility
`
`exemplified by past commissioners. Remarks by Comm’r Maureen K.
`
`Ohlhausen, Regulatory Humility in Practice before the American
`
`Enterprise Institute (Apr. 1, 2015) (“recognizing the inherent limitations
`
`of regulation and acting in accordance with those limits”).2 Instead, the
`
`current commissioners have engaged in a pattern of unauthorized actions
`
`that bear striking resemblance to those of a potentate.
`
`
`https://www.ftc.gov/system/files/documents/public_statements/
`2.
`635811/150401aeihumilitypractice.pdf
`
`2
`
`
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`Nor has the FTC attempted to hide its disregard of these legislative
`
`limits. In November 2022, three commissioners commenced their
`
`campaign of overreach when they replaced a bipartisan statement of
`
`enforcement principles about unfair methods of competition reflecting
`
`decades of legal precedent and economic learning with a statement that
`
`promised, according to one dissenting commissioner, “summarily to
`
`condemn essentially any business conduct [the FTC majority] finds
`
`distasteful.” Comm’r Christine S. Wilson, Dissenting Statement
`
`Regarding the Policy Statement Regarding the Scope of Unfair Methods
`
`of Competition under Section 5 of the Federal Trade Commission Act
`
`(Nov. 10, 2022).3
`
`Three months later, the same three-person majority followed
`
`through on that threat and launched a rulemaking to summarily ban
`
`noncompete provisions
`
`in nearly all employment contracts, a
`
`breathtaking rule that would overturn dozens of state laws, hundreds of
`
`years of legal precedent, and roughly one-fifth of all employment
`
`contracts in the United States. Comm’r Christine S. Wilson, Dissenting
`
`
`https://www.ftc.gov/legal-library/browse/cases-proceedings/public-
`3.
`statements/dissenting-statement-of-commissioner-wilson-on-policy-
`statement-regarding-section-5
`
`3
`
`
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`Statement Concerning the Notice of Proposed Rulemaking for the Non-
`
`Compete Clause Rule (Jan. 5, 2023).4
`
`Blocking the Illumina re-acquisition of Grail is simply the latest
`
`example of FTC overreach; it is industrial policymaking masquerading
`
`as an enforcement action.
`
`Illumina created Grail years ago and then spun off most of its
`
`ownership to allow Grail the freedom to more effectively pursue its
`
`research and funding opportunities. Grail developed multicancer early
`
`detection (MCED) tests that show great promise, and it is today the only
`
`developer to even make limited sales possible without full FDA approval.
`
`But Grail cannot commercialize production and obtain the necessary full
`
`regulatory approval on its own—required steps to delivering the full
`
`benefits of these tests to the public and detecting cancer as quickly as
`
`possible. To accomplish this on any reasonable timeline, it needs to
`
`recombine with Illumina.
`
`To address any possible competitive concerns, Illumina made an
`
`Open Offer to commit to supplying other MCED developers who use
`
`
`https://www.ftc.gov/legal-library/browse/cases-proceedings/public-
`4.
`statements/dissenting-statement-commissioner-christine-s-wilson-
`concerning-notice-proposed-rulemaking-non
`
`4
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`Illumina’s products and services on a nondiscriminatory basis. These
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`developers are well behind Grail—years away even from the necessary
`
`testing––but this binding Open Offer will allow them to continue
`
`whatever competitive pressure they might provide.
`
`Because of the FTC’s actions, Illumina has been unable to fully
`
`integrate Grail and speed up these life-saving developments. Rather than
`
`focus on supplying those other developers, helping Grail commercialize,
`
`and expediting the availability of
`
`life-saving cancer detection
`
`technologies, Illumina has instead been forced to spend years fighting the
`
`FTC. After an extensive investigation and full-blown trial, Illumina’s
`
`FTC’s prospects were looking up when the FTC Administrative Law
`
`Judge (ALJ) ruled in its favor, the first time in history that this FTC ALJ
`
`had ruled for merging parties fighting an FTC challenge. Then, for the
`
`first time in decades, the FTC over-ruled its ALJ. 5
`
`
`After an extensive five-week trial with comprehensive testimony
`5.
`from 66 witnesses and the introduction of 4,500 exhibits, in September
`2022 the FTC ALJ dismissed the FTC’s merger challenge––for the first
`time ever—finding the FTC had failed to meet its prima facie burden.
`The ALJ concluded that Grail’s MCED test is the only currently
`available MCED product and other MCED products will not become
`available for at least five to seven years, if then. Meanwhile, he also
`concluded that Illumina’s “Open Offer” protects against a lessening
`of competition.
`
`5
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`
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`Illumina’s appeal raises many legal and constitutional issues;
`
`however, as members of Congress, Amici will focus on two related
`
`arguments that underscore the FTC’s overreach well beyond the limits
`
`Congress placed on its authority.
`
`First, the FTC’s order is so broad and baseless that the FTC is no
`
`longer merely attending its duty to prevent unfair methods of
`
`competition. It is acting as the potentate that Congress expressly sought
`
`to avoid creating—able to arbitrarily choose winners and losers and
`
`decide the face and fate of an entire industry sector. These actions go well
`
`beyond the authority granted by Congress and implicate the Court’s
`
`major questions doctrine.
`
`The opinion effectively constrains the development of the market
`
`for early cancer detection, which is a matter of economic and political
`
`significance. Opinion of the Commission (Opinion) (Apr. 3, 2023). The
`
`major questions doctrine prevents agencies like the FTC from setting
`
`policies that decide questions of economic and political significance—and
`
`therefore the prerogative of Congress—absent clear authorization from
`
`Congress. The statutes under which the FTC claims to act do not clearly
`
`authorize these actions.
`
`6
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`Second, the FTC’s opinion misinterprets Section 7 of the Clayton
`
`Act, going well beyond the limits imposed by that statute and recognized
`
`by courts for decades. The FTC manufactures a market and market
`
`participants out of whole cloth, misuses expert testimony, and ignores
`
`facts, relying instead on credo and conjecture to conjure a “mere
`
`possibility” of future competitive harm from the transaction. The Clayton
`
`Act requires more than a theory about the “mere possibility” of
`
`a violation.
`
`For either of these reasons, the FTC’s opinion should be overturned,
`
`and this overreach stopped.
`
`ARGUMENT
`
`I.
`
`THE MAJOR QUESTIONS DOCTRINE PRECLUDES THE
`FTC FROM UNWINDING THIS TRANSACTION
`Last year, the Supreme Court for the first time fully explained the
`
`“major questions doctrine.” West Virginia v. EPA, 142 S. Ct. 2587 (2022).
`
`The doctrine itself is not new, as the Court explained: “it refers to an
`
`identifiable body of law that has developed over a series of significant
`
`cases all addressing a particular and recurring problem: agencies
`
`asserting highly consequential power beyond what Congress could
`
`reasonably be understood to have granted.” Id. at 2609 (collecting cases).
`
`7
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`
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`Case: 23-60167 Document: 119-1 Page: 15 Date Filed: 06/12/2023
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`The doctrine is nothing more than the basic civics lesson taught in
`
`grade school: Congress makes policy judgments when it passes
`
`legislation and administrative agencies administer those policy
`
`judgments within the bounds set by the laws passed by Congress. Id.
`
`(“We presume that ‘Congress intends to make major policy decisions
`
`itself, not leave those decisions to agencies.’ ”); see also William Eskridge
`
`Jr., Interpreting Law: A Primer on How to Read Statutes and the
`
`Constitution 288 (2016) (“Even if Congress has delegated an agency
`
`general rulemaking or adjudicatory power, judges presume that
`
`Congress does not delegate its authority to settle or amend major social
`
`and economic policy decisions.”); U.S. Const. art. I, § 1.
`
`The major questions doctrine counsels judicial skepticism toward
`
`agency action with substantial “economic and political significance”—i.e.,
`
`action that strays into the arena preserved for legislators. West Virginia,
`
`142 S. Ct. at 2608. When confronted with such cases, courts must assure
`
`themselves that Congress made an unmistakable delegation of authority
`
`for such agency action. Only then may the agency “implement and
`
`enforce the laws” Congress enacted. Gundy v. United States, 139 S. Ct.
`
`2116, 2123 (2019). Absent such a clear statement from Congress, there is
`
`8
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`
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`an unacceptable risk that the administrative agency is not administering
`
`the law, but instead “attempting to ‘work around’ the legislative process
`
`to resolve for itself a question of great political significance.” West
`
`Virginia, 142 S. Ct. at 2621 (Gorsuch, J., concurring) (citation omitted).
`
`Courts presume “Congress intends to make major policy decisions
`
`itself, not leave those decisions to agencies.” Id. at 2609. An agency’s
`
`assertion of “unheralded” regulatory power over “a significant portion of
`
`the American economy” also presents a major question. Id. at 2608. And
`
`to take such regulatory action, an agency must point to clear
`
`congressional authorization. See Ala. Ass’n of Realtors v. HHS, 141 S. Ct.
`
`2485, 2489 (2021).
`
`The FTC’s obstruction of Illumina’s re-acquisition of Grail is a
`
`textbook example of agency action that meets both prongs of the major
`
`questions doctrine. First, the agency action is one of “economic and
`
`political significance” as it hinders the development, regulatory approval,
`
`and commercialization of an entire market for a revolutionary method to
`
`detect multiple forms of cancer—literally, a matter of life and death.
`
`Second, the FTC went well beyond any authority granted by Congress
`
`under the Clayton and FTC Acts by becoming a sector planner and
`
`9
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`substituting its judgment for that of the marketplace by selecting the
`
`number and identity of competitors in a nascent market.
`
`A. The FTC’s Obstruction of the Illumina-Grail Merger Is
`an Action of Economic and Political Significance
`Triggering the Major Questions Doctrine
`Cancer risk and its early detection obviously are matters of
`
`“economic and political significance.” The disease killed over 600,000
`
`Americans in 2021, the second leading cause of death.6 Congress has
`
`made many policy decisions to fight it. In the Centers for Disease Control
`
`and Prevention Consolidated Appropriations Act in 2023, Congress
`
`allocated $7.3 billion to the National Cancer Institute (NCI), a $408
`
`million increase year over year.7
`
`Of that money, $216 million was allocated for the NCI component
`
`of the Cancer Moonshot, the Biden Administration’s plan to “end cancer
`
`as we know it.” While there are many elements of the Cancer Moonshot,
`
`
`Centers for Disease Control and Prevention, National Center for
`6.
`Health Statistics, FastStats, Leading Causes of Death, https://www.cdc.
`gov/nchs/faststats/leading-causes-of-death.htm
`7.
`Fact Sheet: President Biden Reignites Cancer Moonshot
`to End Cancer as We Know It (Feb. 2, 2022), https://www.
`whitehouse.gov/briefing-room/statements-releases/2022/02/02/fact-
`sheet-president-biden-reignites-cancer-moonshot-to-end-cancer-as-we-
`know-it/
`
`10
`
`
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`one is for the NCI to “study and evaluate multicancer detection tests,”
`
`like Grail’s test. The point is that cancer detection is a matter of economic
`
`and political significance and Congress has treated it as such.
`
`Grail is poised to play a large role in improving cancer detection.
`
`From a single blood draw, its test can simultaneously screen for more
`
`than fifty types of cancer in asymptomatic patients. FTC Initial Decision
`
`¶¶ 228, 231 (Sept. 9, 2022) (Initial Decision). Grail’s test is the only such
`
`MCED test for sale now, though in limited quantities without full FDA
`
`approval. Grail’s small size and scale means it needs to combine with
`
`Illumina to achieve wide-scale commercialization, timely regulatory
`
`approvals, payor reimbursement, and production and distribution at
`
`scale. The FTC has chosen to insert itself and its own speculative
`
`judgments into this matter of “economic and political significance.”
`
`B. The FTC Exceeded the Limited Authority Granted to
`It by Congress Under the FTC and Clayton Acts
`Yet Congress did not clearly authorize the FTC in either the FTC
`
`Act or the Clayton Act to make the policy decisions it effectively made in
`
`blocking this transaction. Under the FTC Act, the FTC may prohibit
`
`“unfair methods of competition.” 15 U.S.C. § 45. While broad, that charge
`
`is not boundless.
`
`11
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`Case: 23-60167 Document: 119-1 Page: 19 Date Filed: 06/12/2023
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`Congress intended the FTC to use Section 5, like other laws aimed
`
`at prohibiting anticompetitive conduct, to protect competition, not
`
`competitors. See Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S.
`
`477, 488 (1977) (quoting Brown Shoe Co. v. United States, 370 U.S. 294,
`
`320 (1962) (the antitrust laws were enacted for “the protection of
`
`competition, not competitors”)).
`
`The FTC now disregards Congress’ direction to focus on
`
`competition—not the number of competitors—and instead appointed
`
`itself health care sector planner when it found that more potential (i.e.,
`
`hypothetical) developers of MCED tests necessarily will improve
`
`competition. Instead of focusing on competition and its results for the
`
`American public, the FTC’s opinion attempts to revive long-discredited
`
`analyses of vertical mergers that focus on “the number and strength of
`
`competing suppliers and purchasers.” Opinion at 41, 46. As
`
`Commissioner Wilson’s concurring opinion notes, the cases relied on by
`
`the majority are more than forty years old and have been ignored by the
`
`12
`
`
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`Case: 23-60167 Document: 119-1 Page: 20 Date Filed: 06/12/2023
`
`FTC and the courts in numerous more recent cases. Comm’r Wilson
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`Concurrence at 2 (Apr. 3, 2023).8
`
`And for good reason. As the concurrence notes, those old cases relied
`
`on a discredited economic paradigm—Structure-Conduct-Performance—
`
`that focused more on counting competitors than economic realities
`
`(quoting Herbert J. Hovenkamp, Competitive Harm from Vertical
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`Mergers, Fac. Scholarship at Penn Carey L. at 5 (Oct. 24, 2020)9 (“The
`
`economic writings since the 1980’s has largely repudiated the Brown
`
`Shoe view of vertical mergers.”)). Comm’r Wilson Concurrence at 2. The
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`FTC’s focus on individual potential rivals—and blithe assumption that
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`more of them will necessarily lead to better outcomes for consumers—is
`
`contrary to the direction Congress set when it passed Section 5 of the
`
`FTC Act. The FTC is seeking to help hypothetical potential competitors—
`
`not competition, and certainly not the public.
`
`In short, the FTC is punishing the more efficient Grail by slowing
`
`down its commercialization and allowing the other developers of MCED
`
`
`https://www.ftc.gov/system/files/ftc_gov/pdf/d09401wilsoncon
`8.
`curringopinion.pdf.
`
`9.
`
`https://scholarship.law.upenn.edu/faculty_scholarship/2218/
`
`13
`
`
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`Case: 23-60167 Document: 119-1 Page: 21 Date Filed: 06/12/2023
`
`tests a chance to catch up. Everyone agrees Grail is ahead of other
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`developers. It is the only developer selling an MCED test. Allowing Grail
`
`to combine with Illumina through the transaction will speed regulatory
`
`approval and commercialization of Grail’s test, saving countless lives.
`
`With the Open Offer, other developers will continue to have the
`
`opportunity to develop MCED tests alongside Grail’s, perhaps even
`
`bettering it. By blocking the transaction, the FTC is slowing down the
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`most efficient developer to date in an effort to protect hypothetical future
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`competitors, thereby exceeding the authority granted to it by Congress.
`
`C. The FTC Botched the Necessary Market Analysis
`Required Under the Clayton Act
`The FTC also exceeded the authority granted by Congress to
`
`prohibit anticompetitive mergers under the Clayton Act by confidently
`
`conjuring a market definition and list of participants before anyone is
`
`sure any market exists. 15 U.S.C. § 18.
`
`Section 7 of the Clayton Act requires the FTC to show a substantial
`
`lessening of competition “in any line of commerce in any section of the
`
`country.” Id. The Court has long held that this language means that
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`“[d]etermination of the relevant market is a necessary predicate” to a
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`Section 7 claim. United States v. E.I. duPont de Nemours & Co., 353 U.S.
`
`14
`
`
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`Case: 23-60167 Document: 119-1 Page: 22 Date Filed: 06/12/2023
`
`586, 594 (1957). The Court has also held that such a determination
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`requires a reasoned analysis of real-world facts, not a commissioner’s
`
`theoretical musings on competition. See United States v. Gen. Dynamics
`
`Corp., 415 U.S. 486, 498 (1974) (“Congress indicated plainly that a
`
`merger had to be functionally viewed, in the context of its particular
`
`industry.”) (quoting Brown Shoe, 370 U.S. at 321–22).
`
`Here, the FTC defines a “nascent” market for MCED tests despite
`
`having few if any of the functional facts necessary for such a
`
`determination. The FTC does not know key attributes of the products in
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`the alleged market, such as how many cancers an MCED must detect—
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`is it two, fifty, or something in between? The FTC does not know how
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`those cancers will be detected—a single blood draw or some different or
`
`additional procedures? Who are the participants in the market? Grail is
`
`the only one selling these kinds of tests now, though in limited quantities
`
`prior to full regulatory approval. The FTC considered seven other
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`developers—are some, or none, or all of them participants in “the
`
`market?” All known rivals are years away from commercial launch and
`
`full regulatory approval—when, if ever, will any of them obtain such
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`approvals? Even before then, to what extent will each of them engage in
`
`15
`
`
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`Case: 23-60167 Document: 119-1 Page: 23 Date Filed: 06/12/2023
`
`the years-long studies to even gather the data to begin the
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`regulatory process?
`
`Congress required the FTC and judges to identify a “line of
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`commerce” and “section of the country” under Section 7 using real-world
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`facts to rein in any temptation to go beyond protecting competition by
`
`inventing markets and shaping an industry as the FTC thinks it should
`
`be shaped. 15 U.S.C. § 18. Congress gave the FTC broad powers to stop
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`anticompetitive practices. But that delegation did not include the power
`
`to decide all major policy questions by shaping a market’s structure and
`
`naming and numbering competitors before anyone knows if a product or
`
`market even exists.
`
`The FTC lacks the clear congressional authority to make the major
`
`policy decision it has made here.
`
`II. THE FTC IS NOT ACTING CONSISTENTLY WITH THE
`DIRECTIVES OF THE CLAYTON ACT
`The Clayton Act, as amended, prohibits mergers whose effect “may
`
`be substantially to lessen competition, or to tend to create a monopoly.”
`
`Id. This standard does not require the FTC to show that the merger will
`
`have the proscribed competitive effect with certainty, but it must
`
`establish that the competitive effect is more than a mere possibility.
`
`16
`
`
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`Case: 23-60167 Document: 119-1 Page: 24 Date Filed: 06/12/2023
`
`The FTC misused expert testimony, ignored real world facts, and relied
`
`on theory and conjecture to summon up, at most only a “mere possibility”
`
`of competitive harm from the transaction. Id.
`
`Congress used the “may be” language in the original Clayton Act.
`
`When amending the Act in 1950, Congress maintained that language.
`
`While Congress did not intend to require certainty to condemn
`
`mergers as anticompetitive, it did intend to require something more than
`
`a theoretical possibility of such harm. “The use of these words means that
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`[the amended Clayton Act] would not apply to the mere possibility but
`
`only to the reasonable probability of the prescribed effect.” S. Rep. No.
`
`1775, 81st Cong., 2d Sess. 6, Amending an Act entitled: An Act to
`
`supplement existing laws against unlawful restraints and monopolies,
`
`and for other purposes, approved October 15, 1914 (38 Stat. 730)
`
`(emphasis added).
`
`Courts, beginning with the Supreme Court, have subsequently
`
`interpreted and applied Congress’ direction. For example, the Court in
`
`Brown Shoe clearly drew the “certainties/probabilities/possibilities”
`
`distinction:
`
`Congress used the words ‘may be substantially to lessen
`competition’ (emphasis supplied), to indicate that its concern
`
`17
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`
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`Case: 23-60167 Document: 119-1 Page: 25 Date Filed: 06/12/2023
`
`was with probabilities, not certainties. Statutes existed for
`dealing with clear-cut menaces to competition; no statute was
`sought for dea
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