The Fix Is In – Key Learnings From Recent Vertical Merger Challenges

By:  Jon B. Dubrow, Stephen Wu, Matt Evola and Bailey K. Sanders (McDermott Will & Emery/Antitrust Alert) 

The FTC recently celebrated a significant victory in its efforts to safeguard competition in the healthcare sector when Illumina, Inc. announced on December 17, 2023, its decision to divest GRAIL, Inc. in compliance with a divestiture order from the European Commission. However, this development followed a ruling by the Fifth Circuit regarding Illumina’s appeal of the FTC’s directive to divest GRAIL. Upon closer examination of the Fifth Circuit’s ruling, it appears that the FTC, along with the Department of Justice (DOJ), have encountered setbacks in their broader campaign to establish a rigorous standard for parties defending transactions through contractual adjustments aimed at addressing competition concerns.

The Fifth Circuit overturned the FTC’s decision and sent it back for review due to legal errors, dismissing both the FTC’s argument on how courts should handle such adjustments within the framework of a Clayton Act case and its perspective on the level of competition any such adjustment must substitute. This decision aligns the Fifth Circuit with courts in California (in cases such as Microsoft/Activision) and D.C. (in instances like AT&T/Time Warner and UnitedHealth/Change Health), all of which have rejected the arguments presented by the FTC and DOJ regarding the treatment of adjustments in litigation…

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