The American antitrust gets a European makeover
The Federal Trade Commission finished hearing testimony last week in its administrative process to force a genome sequencing company, Illumina,
to review its recent acquisition of a startup whose blood tests can detect many cancers at an early stage.
Normally, this is an acquisition that the FTC would approve. The decision to challenge Illumina indicates a drastically different approach to antitrust that will prove suffocating.
The established antitrust approach – economic analysis first and foremost, with consumer welfare as a common thread, a central role for judicial review and the rule of law, and embracing innovation and dynamic competition – has paid astonishing dividends . The most successful companies in the world are in the United States because the best competition law in the world is here. But that will soon be a thing of the past.
The traditional American approach is replaced by a uniformly more bureaucratic approach, avoiding courts and economic evidence in favor of political judgments. These changes, encouraged by both right-wing populists and left-wing postmodernists, will make American antitrust more European.
The Illumina affair is the most striking example of the Europeanization of American antitrust. In September 2020, she offered to buy out Grail, a company she founded in 2015 and split in 2017. U.S. antitrust law has traditionally understood that acquisitions involving companies in the same supply chain (Grail uses the devices Illumina) tend to unlock important pro-consumers. efficiencies. Here, a company could get help rolling out its revolutionary blood test years ahead of schedule.
In the past, the FTC would likely have approved this for several reasons. On the one hand, the early detection multicancer biopsy market is non-existent, as is Grail’s revenue. The Grail test is a very differentiated product; other screening tests that are in development are more likely to be adjuncts and not substitutes. And Illumina would be able to speed up Grail’s uptime by several years, potentially saving more lives. But the FTC’s challenge throws this bird in the hand in deference to the threat of price discrimination that won’t exist for several years, if at all. When assumptions come between you and your theory of evil, you have no theory of evil, just speculation.
The FTC’s complaint against the Illumina-Grail deal was also at odds with new vertical merger guidelines it had developed with the Department of Justice, then withdrew this month without the possibility of public comment. . But here’s the continental twist: The FTC has dropped its initial federal lawsuit involving the Grail acquisition and said it would defer to the European Union instead. According to the FTC statement, now that “the European Commission is investigating, Illumina and Grail cannot proceed with the transaction without obtaining clearance from the European Commission.” But implementing the deal is exactly what Illumina and Grail did.
It was a bold counter-move to the FTC’s attempt to ban the merger through procedural shenanigans. As Tad Lipsky, former director of the FTC’s Competition Bureau, recently observed: “The notion of allowing sequential merger reviews by different jurisdictions, as in this case, would cause massive delays for transactions subject to review. review in multiple jurisdictions. “
Since when has the US government outsourced governance in Europe? Bad enough when the FTC sidesteps federal court in favor of its own administrative process; it is much worse that it withdraws the cases from the federal court and hands them over to the European bureaucrats.
In addition to outsourcing to the sclerotic bureaucracies of Europe, we are on the verge of importing this bureaucracy onto American soil. After seeing the UK and Australia implement tech-specific regulators, some members of Congress are keen to join a US spin-off company. Whatever the problems with “big tech”, adding another regulator will not solve them.
Even without congressional action, Lina Khan, president of the FTC, outlines her own central plan for the economy. Those who hold power in government can hope that these changes will be rolled out for the greater good. And they might, on occasion, accomplish that. But the most likely will be a simple transfer of power from judges to European bureaucrats.
The success of this country must not be compromised to punish political enemies. The direction of our antitrust institutions, and the well-being they facilitate, is too important for Europe to take the lead. There will be nothing good in turning Washington into New Brussels.
Mr. Wright is Executive Director of the Global Antitrust Institute at Scalia Law School. He was the Republican Commissioner of the FTC from 2013 to 2015.
Copyright © 2021 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8