Case: 23-60167 Document: 254 Page: 1 Date Filed: 08/04/2023
`
`No. 23-60167
`
`IN THE UNITED STATES COURT OF APPEALS
`FOR THE FIFTH CIRCUIT
`–––––––––––––––––––––––––––––––––––––––––––––
`ILLUMINA, INCORPORATED; GRAIL,
`INCORPORATED, now known as GRAIL, L.L.C.
`Petitioners,
`v.
`FEDERAL TRADE COMMISSION,
`Respondent.
`–––––––––––––––––––––––––––––––––––––––––––––
`On Petition for Review of an Order
`of the Federal Trade Commission
`Docket No. 9401
`–––––––––––––––––––––––––––––––––––––––––––––
`BRIEF OF THE FEDERAL TRADE COMMISSION
`(PUBLIC VERSION)
`–––––––––––––––––––––––––––––––––––––––––––––
`
`Of Counsel:
`SUSAN A. MUSSER
`STEPHEN MOHR
`JORDAN ANDREW
`DAVID GONEN
`Attorneys
`FEDERAL TRADE COMMISSION
`Washington, D.C., 20850
`
`ANISHA S. DASGUPTA
`General Counsel
`MATTHEW M. HOFFMAN
`Attorney
`FEDERAL TRADE COMMISSION
`600 Pennsylvania Avenue, N.W.
`Washington, D.C. 20580
`(202) 326-3097
`mhoffman@ftc.gov
`
`

`

`Case: 23-60167 Document: 254 Page: 2 Date Filed: 08/04/2023
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`
`
`
`
`STATEMENT REGARDING ORAL ARGUMENT
`Oral argument would aid the Court in resolving the issues raised
`
`in this petition for review.
`
`
`
`
`
`

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`Case: 23-60167 Document: 254 Page: 3 Date Filed: 08/04/2023
`
`TABLE OF CONTENTS
`
`STATEMENT REGARDING ORAL ARGUMENT ................................... i
`ADDENDUM OF RELEVANT STATUTES ............................................ iii
`TABLE OF AUTHORITIES ..................................................................... iv
`CITATION ABBREVIATIONS ............................................................... xii
`INTRODUCTION ...................................................................................... 1
`JURISDICTIONAL STATEMENT ........................................................... 3
`QUESTIONS PRESENTED ..................................................................... 3
`STATEMENT OF THE CASE .................................................................. 3
`A.
`The Race To Develop MCED Tests ......................................... 3
`B.
`Illumina’s NGS Platforms ....................................................... 4
`C.
`Illumina’s Acquisition of Grail ................................................ 5
`D.
`The FTC and the Clayton Act ................................................. 5
`E.
`Proceedings in This Case. ....................................................... 8
`F.
`The Commission Decision ..................................................... 10
`G. Commissioner Wilson’s Concurrence .................................... 13
`SUMMARY OF ARGUMENT ................................................................. 14
`STANDARD OF REVIEW....................................................................... 18
`ARGUMENT ........................................................................................... 19
`I.
`The Commission Properly Found That Illumina’s
`Merger With Grail Violates the Clayton Act. ....................... 19
`A.
`The Commission Properly Defined the
`Relevant Market. ......................................................... 21
`
`ii
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`Case: 23-60167 Document: 254 Page: 4 Date Filed: 08/04/2023
`
`B.
`
`C.
`
`D.
`
`2.
`
`The Commission Properly Found a Prima
`Facie Case of Anticompetitive Effects. ........................ 31
`1.
`The Commission Properly Found a
`Prima Facie Case Under the Ability-
`and-Incentive Framework. ................................. 31
`The Commission Properly Found a
`Prima Facie Case Under Brown Shoe. ............... 38
`The Commission Properly Held That the
`Open Offer Does Not Offset the Merger’s
`Anticompetitive Effects. ............................................... 43
`The Commission Properly Found That
`Illumina’s Claimed Efficiencies Did Not
`Rebut the Showing of Anticompetitive
`Effects. .......................................................................... 50
`Illumina’s Constitutional Challenges Lack Merit. ............... 59
`A.
`Illumina’s Nondelegation Argument Is
`Waived, Not Properly Presented, and
`Wrong. .......................................................................... 60
`Illumina’s Article II Challenge Is Barred by
`Supreme Court Precedent and Provides No
`Basis for Invalidating the Commission’s
`Order. ........................................................................... 65
`The Commission’s Procedures Do Not
`Violate Due Process. .................................................... 70
`Illumina Was Not Denied Equal Protection. ............... 76
`D.
`CONCLUSION ........................................................................................ 81
`ADDENDUM OF RELEVANT STATUTES
`
`II.
`
`B.
`
`C.
`
`iii
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`

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`Case: 23-60167 Document: 254 Page: 5 Date Filed: 08/04/2023
`
`TABLE OF AUTHORITIES
`
`CASES
`AD/SAT v. Assoc. Press,
` 181 F.3d 216 (2d Cir. 1999) ......................................................... 28, 36
`Agostini v. Felton,
`521 U.S. 203 (1997) ............................................................................. 67
`Avondale Shipyards, Inc. v. Vinson,
`623 F.2d 1117 (5th Cir. 1980) ............................................................. 75
`Axon Enters., Inc. v. FTC,
`143 S. Ct. 890 (2023) ........................................................................... 73
`Baum v. Blue Moon Ventures, LLC,
` 513 F.3d 181 (5th Cir. 2008) .............................................................. 62
`Bridas S.A.P.I.C. v. Gov’t of Turkmenistan,
` 345 F.3d 347 (5th Cir. 2003) .............................................................. 22
`Brown Shoe Co. v. United States,
` 370 U.S. 294 (1962) ............................. 11, 20, 21, 22, 24, 29, 38, 39, 40
`C.E. Servs., Inc. v. Control Data Corp.,
` 759 F.2d 1241 (5th Cir. 1985) ............................................................ 26
`Califano v. Yamasaki,
` 442 U.S. 682 (1979) ............................................................................ 19
`Carr v. Saul,
` 141 S. Ct. 1352 (2021) ........................................................................ 60
`Chicago Bridge & Iron Co. N.V. v. FTC,
`534 F.3d 410 (5th Cir. 2008) ................................. 10, 18, 19, 40, 45, 46
`Cmty. Fin. Servs. Ass’n of Am. v. CFPB,
` 51 F.4th 616 (5th Cir. 2022) ........................................................ 60, 69
`Collins v. Yellin,
`141 S. Ct. 1761 (2021) ............................................................. 66, 68, 69
`
`iv
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`

`Case: 23-60167 Document: 254 Page: 6 Date Filed: 08/04/2023
`
`Cotherman v. FTC,
` 417 F.2d 587 (5th Cir. 1969) .............................................................. 60
`FCC v. Beach Commc’ns,
`508 U.S. 307 (1993) ....................................................................... 76, 78
`Ford Motor Co. v. United States,
` 405 U.S. 562 (1972) ................................................................ 39, 41, 42
`Fruehauf Corp. v. FTC,
` 603 F.2d 345 (2d Cir. 1979) ......................................................... 39, 41
`FTC v. Am. Nat’l Cellular, Inc.,
`810 F.2d 1511 (9th Cir. 1987) ............................................................. 67
`FTC v. Arch Coal,
` 329 F. Supp. 2d 109 (D.D.C. 2004) .................................................... 30
`FTC v. Cement Inst.,
`333 U.S. 683 (1948) ....................................................................... 71, 77
`FTC v. Elders Grain, Inc.,
` 868 F.2d 901 (7th Cir. 1989) .............................................................. 20
`FTC v. Hackensack Meridian Health, Inc.,
` 30 F.4th 160 (3d Cir. 2022) ................................................................ 51
`FTC v. Ind. Fed’n of Dentists,
` 476 U.S. 447 (1986) ...................................................................... 18, 19
`FTC v. Penn State Hershey Med. Ctr.,
` 838 F.3d 327 (3d Cir. 2016) ............................................................... 51
`FTC v. R.F. Keppel & Bro., Inc.,
` 291 U.S. 304 (1934) ............................................................................ 64
`FTC v. Staples, Inc.,
` 190 F. Supp. 3d 100 (D.D.C. 2016) .................................................... 48
`FTC v. Sysco Corp,
` 113 F. Supp. 3d 1 (D.D.C. 2015) ........................................................ 48
`
`v
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`

`Case: 23-60167 Document: 254 Page: 7 Date Filed: 08/04/2023
`
`FTC v. Univ. Health, Inc.,
` 938 F.2d 1206 (11th Cir. 1991) .......................................................... 52
`Gibson v. FTC,
`682 F.2d 554 (5th Cir. 1982). .............................................................. 71
`Golden Gate Pharmacy Servs., Inc. v. Pfizer,
` No. C-09-3854, 2010 WL 1541257 (N.D. Cal., April 16, 2010) ......... 30
`Gundy v. United States,
` 139 S. Ct. 2116 (2019) .................................................................. 62, 63
`Heatransfer Corp. v. Volkswagenwerk, A.G.,
` 553 F.2d 964 (5th Cir. 1977) .............................................................. 20
`Heller v. Doe,
`509 U.S. 312 (1993) ............................................................................. 76
`Hosp. Corp. of Am. v. FTC,
`807 F.2d 1381 (7th Cir. 1986) ............................................................. 77
`Humphrey’s Executor v. United States,
`295 U.S. 602 (1935) ........................................................... 17, 64, 66, 68
`Impax Labs v. FTC,
` 994 F.3d 484 (5th Cir. 2021) .................................................. 18, 19, 43
`In re IBM Corp.,
`618 F.2d 923 (2nd Cir. 1980) .............................................................. 74
`Jarkesy v. SEC,
` 34 F.4th 446 (5th Cir. 2022) ...................................... 16, 19, 60, 61, 62
`Ky. Speedway, LLC v. Nat’l Ass’n of Stock Car Auto Racing, Inc.,
` 588 F.3d 908 (6th Cir. 2009) .............................................................. 26
`Lefebure v. D’Aquila,
`15 F.4th 650 (5th Cir. 2021) ............................................................... 67
`Mercantile Tex. Corp. v. Bd. of Governors of the Fed. Rsrv. Sys.,
` 638 F.2d 1255 (5th Cir. 1981) ............................................................ 31
`
`vi
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`Case: 23-60167 Document: 254 Page: 8 Date Filed: 08/04/2023
`
`N.Y. Cent. Sec. Corp. v. United States,
` 287 U.S. 12 (1932) .............................................................................. 63
`Nat’l Broad. Co. v. United States,
` 319 U.S. 190 (1943) ............................................................................ 63
`Ohio v. Am. Express Co.,
` 138 S. Ct. 2274 (2018) ........................................................................ 22
`Phillips v. Jt. Legis. Comm. on Performance & Expenditure Rev.,
`637 F.2d 1014 (5th Cir. 1981) ............................................................. 73
`Rothery Storage & Van Co. v. Atlas Van Lines, Inc.,
` 792 F.2d 210 (D.C. Cir. 1986) ............................................................ 24
`Schweiker v. McClure,
`456 U.S. 188 (1982) ............................................................................. 71
`SCM Corp. v. Xerox Corp,
` 645 F.2d 1195 (2d Cir. 1981) ............................................................. 30
`Se. Mo. Hosp. v. C.R. Bard, Inc.,
` 642 F.3d 608 (8th Cir. 2011) .............................................................. 23
`Seila Law LLC v. CFPB,
`140 S. Ct. 2183 (2020) ......................................................................... 66
`Sierra Club v. United States Dep’t of Interior,
`990 F.3d 898 (5th Cir. 2021) ............................................................... 72
`Smith v. United States,
` 568 U.S. 106 (2013) ............................................................................ 47
`So. Pac. Commc’n Co. v AT&T Co.,
`740 F.2d 980 (D.C. Cir. 1994) ............................................................. 73
`St. Alphonsus Med. Ctr.-Nampa, Inc. v. St. Luke’s Health Sys.,
` 778 F.3d 775 (9th Cir. 2015) .................................................. 51, 55, 65
`United States v. Aetna Inc.,
` 240 F. Supp. 3d 1 (D.D.C. 2017) ........................................................ 48
`
`vii
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`Case: 23-60167 Document: 254 Page: 9 Date Filed: 08/04/2023
`
`United States v. Anthem, Inc.,
` 855 F.3d 345 (D.C. Cir. 2017) ............................................................ 51
`United States v. AT&T Inc.,
` 310 F. Supp. 3d 161 (D.D.C. 2018) .................................................... 11
`United States v. AT&T Inc.,
` 916 F.3d 1029 (D.C. Cir. 2019) .................................................... 11, 49
`United States v. Benitez-Villafuerte,
`186 F.3d 651 (5th Cir. 1999) ............................................................... 71
`United States v. Diggins,
` 36 F.4th 302 (1st Cir. 2022) ............................................................... 63
`United States v. E.I. du Pont de Nemours & Co.,
` 353 U.S. 586 (1957) ............................................................................ 20
`United States v. E.I. du Pont de Nemours & Co.,
` 366 U.S. 316 (1961) ...................................................................... 47, 48
`United States v. Fernandez,
` 48 F.4th 405 (5th Cir. 2022) .............................................................. 59
`United States v. Libbey, Inc.,
` 211 F. Supp. 2d 34 (D.D.C. 2002) ................................................ 49, 50
`United States v. Lopez-Velaquez,
`526 F.3d 804 (5th Cir. 2008) ......................................................... 79, 80
`United States v. Phila. Nat’l Bank,
` 374 U.S. 321 (1960) ...................................................................... 20, 59
`United States v. UnitedHealth Group, Inc.,
` 630 F. Supp. 3d 118 (D.D.C. 2022) .................................................... 49
`Whitman v. Am. Trucking Ass’ns,
` 531 U.S. 457 (2001) ............................................................................ 63
`Wiener v. United States,
`357 U. S. 349 (1958) ............................................................................ 68
`
`viii
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`Case: 23-60167 Document: 254 Page: 10 Date Filed: 08/04/2023
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`Withrow v. Larkin,
` 421 U.S. 35 (1975) .................................................................. 17, 70, 71
`STATUTES
`5 U.S.C. § 554(d)(2) ............................................................................. 7, 72
`10 U.S.C. § 942(f) ..................................................................................... 68
`15 U.S.C § 21 ............................................................................................. 6
`15 U.S.C. § 18 .......................................................................... 1, 19, 21, 78
`15 U.S.C. § 2053(a) .................................................................................. 68
`15 U.S.C. § 21(b) .................................................................... 3, 6, 7, 67, 77
`15 U.S.C. § 21(c) ........................................................................ 3, 7, 18, 80
`15 U.S.C. § 25 .......................................................................................... 77
`15 U.S.C. § 41 ............................................................................................ 6
`15 U.S.C. § 45 ............................................................................................ 6
`15 U.S.C. § 45(b) .......................................................................... 3, 6, 7, 62
`15 U.S.C. § 45(c) .................................................................................... 3, 7
`15 U.S.C. § 53(b) ............................................................................ 8, 61, 62
`26 U.S.C. § 7443(f) ................................................................................... 68
`28 U.S.C. § 176 ........................................................................................ 68
`29 U.S.C. § 153(a) .................................................................................... 68
`38 U.S.C. § 7253(f) ................................................................................... 68
`42 U.S.C. § 7171(b) .................................................................................. 68
`Clayton Act, ch. 323, 38 Stat. 730 (1914) ............................................ 6, 67
`Federal Trade Commission Act, ch. 311, 38 Stat. 717 (1914) .................. 6
`
`ix
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`REGULATIONS
`16 C.F.R. § 0.8 ........................................................................................... 6
`16 C.F.R. § 3.31 ................................................................................... 7, 80
`16 C.F.R. § 3.41 ....................................................................................... 80
`16 C.F.R. § 3.41(c) ..................................................................................... 7
`16 C.F.R. § 3.43 ............................................................................. 7, 75, 80
`16 C.F.R. § 3.46 ......................................................................................... 7
`16 C.F.R. § 3.51 ......................................................................................... 7
`16 C.F.R. § 3.52 ......................................................................................... 7
`16 C.F.R. § 3.54 ......................................................................................... 7
`16 C.F.R. § 4.7(b) ................................................................................. 7, 72
`OTHER AUTHORITIES
`Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law
`§ 335a (May 2023 update) .................................................................. 42
`§ 1008a (Aug. 2022 update) ................................................................ 20
`Dep’t of Justice & FTC, Horizontal Merger Guidelines (2010) .............. 30
`EC Press Release, Mergers: Commission adopts interim measures
`to prevent harm to competition following Illumina’s early
`acquisition of GRAIL (Oct. 29, 2021 ..................................................... 9
`EC Press Release, Mergers: Commission fines Illumina and
`GRAIL for implementing their acquisition without prior merger
`control approval (July 12, 2023) ........................................................... 9
`EC Press Release, Mergers: Commission prohibits acquisition of
`GRAIL by Illumina (Sept. 6, 2022) ...................................................... 9
`GAO, DOJ and FTC Jurisdictions Overlap, but Conflicts are
`Infrequent (Jan. 2023) ........................................................................ 78
`
`x
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`Case: 23-60167 Document: 254 Page: 12 Date Filed: 08/04/2023
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`John Gramlich, Pew Research Center, Only 2% of federal criminal
`defendants go to trial, and most who do are found guilty (June
`11, 2019) .............................................................................................. 74
`Maureen K. Ohlhausen, Administrative Litigation at the FTC:
`Effective Tool for Developing the Law or Rubber Stamp, 12 J.
`Comp. L. & Econ. 623 (2016) .............................................................. 74
`Steven C. Salop, Invigorating Vertical Merger Enforcement, 127
`Yale L.J. 1962 (2018) .......................................................................... 55
`S. Rep. No. 63-597 (1914) ........................................................................ 64
`S. Rep. No. 93-151 (1973) ........................................................................ 64
`
`
`
`
`
`
`xi
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`Case: 23-60167 Document: 254 Page: 13 Date Filed: 08/04/2023
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`CITATION ABBREVIATIONS
`This Brief uses the same abbreviations used in Petitioners’ Brief,
`
`including the following:
`
`Concurring Opinion of Commissioner Wilson
`Conc.
`Initial Decision of Administrative Law Judge
`ID
`Initial Decision Findings of Fact
`IDF
`Opinion of Commission
`Op.
`Transcript of Oral Argument Before Commission
`Oral Arg. Tr.
`Prehearing Tr. Prehearing Transcript
`PX
`Exhibit of Complaint Counsel
`RX
`Exhibit of Respondents (Petitioners here)
`RFF
`Proposed Findings of Fact of Respondents
`(Petitioners here)
`Trial Transcript
`
`Tr.
`
`
`
`
`
`xii
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`

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`Case: 23-60167 Document: 254 Page: 14 Date Filed: 08/04/2023
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`
`
`
`INTRODUCTION
`This case involves a merger that threatens to stifle ongoing
`
`competition in the race to develop and commercialize multi-cancer early
`
`detection (“MCED”) tests, which can identify several kinds of cancer in
`
`asymptomatic people by analyzing blood samples. Petitioner GRAIL,
`
`Inc., sells an MCED test called Galleri on a limited basis, but the test is
`
`not approved by the Food and Drug Administration, not covered by
`
`insurance, and costs nearly $1000. Several other companies are also
`
`developing MCED tests. Grail’s ordinary-course-of-business documents
`
`show that it sees these companies as serious competitive threats, while
`
`other MCED test developers view Grail as their main rival.
`
`All MCED tests rely on next generation sequencing (“NGS”)
`
`technology to analyze DNA, and petitioner Illumina, Inc., is the only
`
`company that makes suitable NGS platforms. In 2021, Illumina
`
`purchased Grail. After thoroughly reviewing the record of a multi-week
`
`trial, the Federal Trade Commission unanimously found that this
`
`acquisition violates Section 7 of the Clayton Act, 15 U.S.C. § 18, because
`
`it may substantially lessen the existing competition among Grail and
`
`other MCED test developers. The Commission found that the merged
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`

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`Case: 23-60167 Document: 254 Page: 15 Date Filed: 08/04/2023
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`firm will have both the ability and a strongly increased incentive to use
`
`its dominance in NGS platforms to favor Grail and disadvantage rival
`
`test developers—e.g., by raising the prices Illumina charges Grail’s
`
`competitors or degrading their access to service and necessary supplies.
`
`Illumina and Grail (collectively, “Illumina”) petition for review of
`
`the Commission’s order. None of their challenges has merit. The
`
`Commission correctly applied the Clayton Act, its decision is supported
`
`by substantial evidence, and there is no constitutional defect in the
`
`Commission’s structure or its proceedings. At the outset, it is important
`
`to dispel one particular myth that Illumina repeats throughout its brief:
`
`the claim that the merger will save lives by somehow accelerating
`
`Grail’s ability to gain FDA approval and payer acceptance for Galleri.
`
`As the Commission properly found, this claim is based on nothing more
`
`than speculation by a single Illumina executive, who could not identify
`
`a single step Illumina might actually take to expedite Galleri’s
`
`approval.
`
`The fundamental question here is whether the merger will
`
`threaten other companies’ ability to develop rival MCED tests and
`
`deprive Americans of competition in this critical market. Competition
`
`2
`
`

`

`Case: 23-60167 Document: 254 Page: 16 Date Filed: 08/04/2023
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`among MCED test developers will promote innovation, leading to more
`
`and better tests being made available to American consumers at lower
`
`prices. This Court should protect competition, as Congress has directed,
`
`and deny the petition.
`
`JURISDICTIONAL STATEMENT
`The Commission entered its order on March 31, 2023, pursuant to
`
`15 U.S.C. §§ 21(b) and 45(b) . Illumina timely filed its petition on April
`
`5, 2023. This Court has jurisdiction under 15 U.S.C. §§ 21(c) and 45(c) .
`
`QUESTIONS PRESENTED
`1. Did the Commission properly determine that the Illumina-
`
`Grail merger violates the Clayton Act?
`
`2. Were the Commission’s proceedings constitutional?
`
`STATEMENT OF THE CASE
`A. The Race To Develop MCED Tests
`MCED tests are a screening tool to detect cancer at an early stage
`
`in patients with no cancer symptoms. They work by analyzing a sample
`
`of a patient’s blood for minute amounts of certain “biomarkers” (such as
`
`proteins, DNA, or RNA) associated with the presence of cancers. Op. 3.
`
`Grail and several other companies are in a race to develop and
`
`commercialize MCED tests. Op. 3. Grail started selling its Galleri test
`
`3
`
`

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`Case: 23-60167 Document: 254 Page: 17 Date Filed: 08/04/2023
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`in April 2021, but has not yet obtained FDA approval, which means the
`
`test can be sold only on a limited basis. Galleri currently costs $949 and
`
`is not covered by insurance. Op. 12, 14. Another leading competitor,
`
`Exact/Thrive, is developing a test called CancerSEEK, which received a
`
`“breakthrough” device designation from the FDA that could accelerate
`
`its review and regulatory approval. Op. 14-16. Exact/Thrive currently
`
`plans
`
`
`
` Op. 15, 56. Other companies, including Guardant,
`
`Singlera, Freenome, Natera, and Helio Health, are at various stages of
`
`the development and commercialization process. Op. 16-19. As the
`
`Commission found (Op. 31), the market is like a racetrack where some
`
`companies are leading the pack and others are nipping at their heels,
`
`but collectively, competition is spurring the field to move faster and
`
`work harder to provide patients with many choices of MCED tests.
`
`B.
`
`Illumina’s NGS Platforms
`Illumina sells NGS platforms, including the instruments used to
`
`sequence DNA and consumable supplies such as “flow cells” that hold
`
`samples and chemical reagents used in the sequencing process. Op. 4, 6.
`
`NGS platforms are a critical input for MCED tests, and only Illumina
`
`4
`
`

`

`Case: 23-60167 Document: 254 Page: 18 Date Filed: 08/04/2023
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`offers products with the specific characteristics MCED test developers
`
`need: high throughput, high accuracy, low cost, and the ability to read
`
`short DNA fragments. Op. 5-7, 21, 36-40, 42. MCED test developers
`
`thus have no substitute for Illumina’s NGS platforms, either now or in
`
`the near future. Id.
`
`C.
`
`Illumina’s Acquisition of Grail
`Illumina formed Grail in 2016, but later spun it off as a separate
`
`company, retaining a 12% stake and the right to a royalty on net sales
`
`of Grail’s oncology products. Op. 10-11. At the time, Illumina explained
`
`that the spinoff would “level[] the playing field” and “accelerate the
`
`liquid biopsy market for all.” Op. 11, 52; PX2406-005. But in September
`
`2020, Illumina changed its mind and decided to acquire the remainder
`
`of Grail for $8 billion. Op. 11. The Grail acquisition was part of a
`
`strategy to shift Illumina’s focus away from NGS platforms and toward
`
`clinical testing, which Illumina saw as an enormous market opportunity
`
`with much greater profit potential. Op. 45-46; see also PX2151-005;
`
`PX2169-045; PX2488-009; PX2465-006 to -008.
`
`D. The FTC and the Clayton Act
`Congress established the FTC in 1914 and directed it to prevent
`
`“unfair methods of competition” in commerce. FTC Act, ch. 311, § 5, 38
`
`5
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`

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`Case: 23-60167 Document: 254 Page: 19 Date Filed: 08/04/2023
`
`Stat. 717, 719 (1914) (codified as amended at 15 U.S.C. § 45). A few
`
`weeks later, Congress enacted the Clayton Act to further strengthen the
`
`nation’s antitrust regime and directed the FTC to enforce the Act’s anti-
`
`merger provisions. Clayton Act, ch. 323, § 11, 38 Stat. 730, 734 (1914)
`
`(codified as amended at 15 U.S.C § 21).
`
`The Commission consists of five Commissioners appointed by the
`
`President and confirmed by the Senate, no more than three of whom
`
`may be members of the same political party. 15 U.S.C. § 41. To ensure
`
`that the Commission performs its duties as an independent body,
`
`Congress provided that the President may remove Commissioners only
`
`“for inefficiency, neglect of duty, or malfeasance in office.” Id.
`
`Commissioners also serve staggered terms of seven years, so that the
`
`composition of the Commission regularly changes. Id. The President
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`selects one Commissioner as the Chair, who is the executive and
`
`administrative head of the agency, and may change that designation at
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`any time. Id.; 16 C.F.R. § 0.8.
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`Congress directed the Commission to enforce the FTC and Clayton
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`Acts through administrative adjudication. 15 U.S.C. §§ 21(b), 45(b). The
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`Commission may issue an administrative complaint when it has “reason
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`6
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`Case: 23-60167 Document: 254 Page: 20 Date Filed: 08/04/2023
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`to believe” a merger may violate the law. Id. The complaint is not a
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`finding of a violation, but merely the first step in an adversarial process
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`of review. The complaint is referred to an administrative law judge for
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`discovery and a trial. See 16 C.F.R. §§ 3.31-3.46. The Commissioners
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`are not involved in prosecuting the case; that function is performed by
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`agency staff known as Complaint Counsel, who are walled off from the
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`Commissioners and the ALJ and prohibited from having any ex parte
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`contact with them. See 5 U.S.C. § 554(d)(2); 16 C.F.R. § 4.7(b). At trial,
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`both Complaint Counsel and the respondents (i.e., the merging parties)
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`may present testimonial and documentary evidence, cross-examine
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`witnesses, and object to the other side’s evidence, much as they would
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`in a district court proceeding. Id. §§ 3.41(c), 3.43. Following trial, the
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`ALJ issues an initial decision. Id. § 3.51. Either side may then appeal to
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`the full Commission, which reviews the facts and law de novo. Id.
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`§§ 3.52, 3.54. If the Commission finds in favor of Complaint Counsel,
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`the respondent may seek review in an appropriate court of appeals. 15
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`U.S.C. §§ 21(c), 45(c).
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`E. Proceedings in This Case.
`In March 2021, the Commission voted to issue an administrative
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`complaint alleging that the Illumina-Grail merger would violate the
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`Clayton Act and the FTC Act. The vote was unanimous and bipartisan.1
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`The Commission also sought a preliminary injunction in district court
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`to block the merger during the pendency of the administrative case. See
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`15 U.S.C. § 53(b). Shortly afterwards, the European Commission (“EC”)
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`opened an antitrust investigation upon request from several European
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`states. That investigation triggered a standstill obligation that barred
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`Illumina and Grail from completing the merger. In light of the
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`standstill, the Commission determined that interim relief was no longer
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`needed to protect the public interest and voluntarily dismissed the
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`preliminary injunction action. Illumina did not object, though it argued
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`unsuccessfully that the dismissal should be with prejudice. See FTC v.
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`Illumina, Inc., No. 3:21-cv-800 (S.D. Cal), ECF Nos. 120, 124, 126.
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`Despite the European standstill requirement, Illumina closed its
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`acquisition of Grail in August 2021. Op. 11. The merger was not
`
`
`1 The Commissioners at that time were Acting Chairwoman Rebecca Kelly
`Slaughter and Commissioners Noah Joshua Phillips, Rohit Chopra, and Christine
`S. Wilson, with one vacancy.
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`Case: 23-60167 Document: 254 Page: 22 Date Filed: 08/04/2023
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`operationally implemented, however, because the EC ordered Illumina
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`to hold Grail as a separate entity.2 The EC later concluded that the
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`acquisition violated European antitrust law and ordered Illumina to
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`unwind the purchase of Grail.3 It separately fined Illumina €432 million
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`for knowingly and intentionally breaching the standstill obligation.4
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`Meanwhile, following a multi-week trial, the FTC’s ALJ issued an
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`initial decision in favor of Illumina. On appeal, the Commission
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`conducted a de novo review and concluded that the transaction violated
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`the Clayton Act (and therefore the FTC Act as well). Op 2, 24, 93.
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`Although the Commission’s lineup had changed, the decision was again
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`bipartisan and unanimous.5
`
`
`2 EC Press Release, Mergers: Commission adopts interim measures to prevent
`harm to competition following Illumina’s early acquisition of GRAIL (Oct. 29, 2021),
`https://shorturl.at/iGJX4.
`3 EC Press Release, Mergers: Commission prohibits acquisition of GRAIL by
`Illumina (Sept. 6, 2022), https://shorturl.at/nozQ9.
`4 EC Press Release, Mergers: Commission fines Illumina and GRAIL for
`implementing their acquisition without prior merger control approval (July 12,
`2023), https://shorturl.at/hRV58.
`5 The Commissioners at the time of decision were Chair Lina M. Khan and
`Commissioners Rebecca Kelly Slaughter, Christine S. Wilson, and Alvaro Bedoya,
`with one vacancy.
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`F. The Commission Decision
`The Commission agreed with the ALJ that research, development,
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`and commercialization of MCED tests in the United States is the
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`relevant market for evaluating the acquisition. Op. 24-34. It al