Foreclosure and innovation in vertical mergers: analysis of the Illumina/GRAIL case

Details

Supervisors

Johnen, Johannes

Faculty

Faculté des sciences économiques, sociales, politiques et de communication

Degree label

Master [60] en sciences économiques, orientation générale

Abstract

enAn increasing number of markets are characterized by rapid changes due to their innovative nature. This evolution poses a challenge for competition authorities when evaluating mergers occurring in such markets which may hinder future innovation. This thesis analyzes how foreclosure concerns and innovation impact the evaluation of vertical mergers, using the Illumina/GRAIL merger as a case study. Furthermore, it discusses the reasons behind the antitrust authorities’ decision to take a strong stand and block the Illumina/GRAIL merger. The analysis relies on a qualitative assessment of economic theories and the decisions by the European Commission and the U.S. Federal Trade Commission to block the merger. The findings show that the authorities adopted a cautious approach in order to protect overall market innovation by placing more weight on the potential harm than on the efficiencies resulting from the merger, despite the commitments proposed by Illumina. There is also a certain asymmetry in the assessment of uncertainty accompanying these effects. Overall, the Illumina and GRAIL case shows an increasing integration of innovation considerations into the decision-making process of competition authorities.