Amicus Brief: Illumina, Inc. and Grail, Inc., v. Federal Trade Commission
By Katherine Van Dyck and Lee Hepner
INTEREST OF AMICUS
American Economic Liberties Project (“AELP”) is an independent nonprofit research and advocacy organization dedicated to understanding and addressing the problem of concentrated economic power in the United States. AELP organizes and employs a diverse set of leading policy experts in a wide range of areas impacted by concentrated power that include the healthcare industry, private equity, airlines, and the digital marketplace. It advocates for policies that address today’s crisis of concentration through legislative efforts and public policy debates. AELP submits this brief because Petitioners are attempting to rewrite the Clayton Act, so it will become blind to the effects of mergers and acquisitions on innovation, research, and development. Our antitrust laws cannot protect competition if merger challenges supported by clear evidence of foreclosure are rejected based on convoluted, burdensome, and unrealistic requirements for market definition that ignore the effects of acquisitions on future market conditions.
Pursuant to Federal Rule of Appellate Procedure 29(a)(4)(E), no party’s counsel authored this brief in whole or part. In addition, no party or party’s counsel, and no person other than the amicus curiae, its supporters, or its counsel, contributed money that was intended to fund preparing or submitting the brief. All parties have consented to the filing of this amicus brief.
SUMMARY OF ARGUMENT
Petitioners Illumina, Inc. and Grail, Inc.’s (“Petitioners”) criticism of the product market definition adopted by both the full Commission and the administrative law judge (“ALJ”)—that it is “unprecedentedly broad and speculative” (Pet. Br. 29)—is wholly inconsistent with the purpose of Section 7 of the Clayton Act, 15 U.S.C. § 18, and ignores how courts and enforcers have interpreted the law from its inception. The Supreme Court told us in its seminal decision in Brown Shoe v. United States that Section 7 is forward looking:
[T]he very wording of [Section] 7 requires a prognosis of the probable future effect of the merger.
….
It is the probable effect of the merger upon the future as well as the present which the Clayton Act commands the courts and the Commission to examine.
370 U.S. 294, 332 (1962) (emphasis added).
Petitioners’ claim that the Federal Trade Commission “invent[ed] a legally erroneous R&D market”, (Pet. Br. 38) (emphasis added), is belied not only by the long history of enforcement focused on protecting innovation and future market conditions. See infra Section II.B-C. It is explicitly contradicted by the enforcement prerogatives articulated by counsel for Illumina when she sat as a commissioner at the FTC. As then-Commissioner Varney explained in an uncontroversial set of remarks about vertical merger policy, “it is the Commission’s statutory responsibility to consider the possibility, or likelihood, of future anticompetitive effects.” Prepared Remarks of Federal Trade Commissioner Christine A. Varney, Competition Policy in Vertical Mergers and Innovation Markets, at 6 (Apr. 1995) (citing FTC v. Elders Grain, Inc., 868 F.2d 901, 906 (7th Cir. 1989)). Thus, “innovation market analysis does not require any radical departure from the traditional tools used in antitrust analysis.” Id. at 13 (emphasis added). True, there is little to no pricing data to consider. But the parameters are still clear. “In the innovation context, the product market consists of R&D [research and development] directed to particular new or improved goods or processes, and the close substitutes for that R&D.” Id. at 15.
Petitioners’ argument today—that “speculation about future substitutability cannot prove a relevant market” (Pet. Br. 30)—simply cannot be squared with counsel for Illumina’s own prior interpretation of the Commission’s statutory responsibilities. As Amicus AELP demonstrates below, and courts have nearly always accepted, Section 7 is necessarily and almost exclusively concerned with future market conditions and will always involve some degree of speculation. Thus, the relevant product market adopted by the Commission—the “research, development, and commercialization of MCED tests” (the “R&D Market”)—is wholly appropriate under both a plain reading of the statute and courts’ interpretation of the phrase “any line of commerce.” (Op. 24, 34; Conc. Op. 1.)