Illumina's FTC Trouble Dates Back Further than You Think

If you've been following Illumina recently, you know the company's CEO has resigned following a heated proxy battle and the handling of the company's $7.1 billion Grail acquisition. Or, re-acquisition, to be more precise. But the company's Grail saga is not the first time Illumina has encountered a major roadblock from the Federal Trade Commission (FTC).

Back in 2018, Illumina announced its intentions to acquire rival PacificBio (PacBio) in a $1.2 billion merger that was expected to close in mid-2019. The acquisition would have filled an important gap in Illumina's offerings. For years Illumina has prided itself on using short-read technology to sequence DNA. This means it takes lots of small fragments of DNA and puts them together. However, PacBio had taken the opposite and developed long-read sequencing capabilities, which means it can decode longer pieces of DNA with high accuracy.

The Illumina-PacBio deal seemed on track until FTC decided to challenge the acquisiton in December 2019. The FTC accused San Diego, CA-based Illumina of trying to unlawfully maintain its monopoly in the U.S. market for next-generation DNA sequencing systems by extinguishing PacBio as a nascent competitive threat. According to FTC's complaint, the acquisition would harm competition by reducing the combined firm’s incentive to innovate and develop new products.

“When a monopolist buys a potential rival, it can harm competition,” Gail Levine, now the former deputy director of FTC's Bureau of Competition, said at the time. “These deals help monopolists maintain power. That’s why we’re challenging this acquisition.”

An administrative hearing had been set for August 2020, but in January 2020 the companies decided to terminate the deal citing the “lengthy regulatory approval process the transaction has already been subject to and continued uncertainty of the outcome.”

Francis deSouza, who was Illumina's CEO until this week, said the proposed combination would have significantly expanded and accelerated innovation, and ultimately increased the clinical utility and impact of sequencing.

“We are disappointed that our customers and other stakeholders will not realize the powerful advantages of integrating the sequencing capabilities of our two companies,” Michael Hunkapiller, then CEO of PacBio, said at the time. “With that said, we are confident in the future of Pacific Biosciences as we continue to pursue improved sequencing accuracy and throughput that can be utilized in an ever-expanding number of applications.”