Compass Lexecon Helps Deliver a Decisive Victory to Clients Illumina and GRAIL in Landmark Vertical Merger Case

Court Relies Heavily on Testimony of Compass Lexecon Expert Professor Dennis W. Carlton

Compass Lexecon was retained by clients Illumina and GRAIL to provide economic analysis and expert testimony in support of a landmark vertical merger between the two companies that is expected to save thousands of American lives that would have otherwise been claimed by cancer. Opposing the merger was the U.S. Federal Trade Commission. After a lengthy litigation, Chief Administrative Law Judge D. Michael Chappell ruled in favor of Illumina and GRAIL on September 1, 2022, citing extensively to the expert testimony of Compass Lexecon economic expert Professor Dennis W. Carlton. Echoing Professor Carlton’s opinions, Judge Chappell concluded that “Complaint Counsel has failed to prove its asserted prima facie case that Illumina’s post-Acquisition ability and incentive to foreclose or disadvantage Grail’s alleged rivals is likely to result in a substantial lessening of competition in the relevant market for the research, development, and commercialization of MCED tests. Accordingly, the Complaint is dismissed.” This ruling follows on the heels of United States of America v. AT&T Inc., DirecTV Group Holdings, LLC, and Time Warner Inc., another vertical merger that was permitted to proceed in 2018 for which Compass Lexecon and Professor Carlton provided expertise on behalf of defendants.

Professor Carlton served as the lead economic expert for the defense in the litigation. He was joined by Compass Lexecon experts Professor Robert Willig and Margaret Guerin-Calvert in filing reports for the litigation, while Professor Carlton, Professor Michael Katz, and Ms. Guerin-Calvert were called to testify at trial on behalf of defendants. Professor Carlton’s testimony was featured prominently in the judge’s decision. The analysis in Professor Carlton’s expert report was cited as a basis for Judge Chappell’s conclusion that the government’s analysis “fail[ed] to account for Illumina’s pre-merger stake in Grail.” The report and testimony of Ms. Guerin-Calvert were also cited numerous times by Judge Chappell.

Professor Carlton was supported by a Compass Lexecon team led by Yoad Shefi that included Dan O’Brien, Theresa Sullivan, Rick Flyer, Joseph Goodman, and Jonnie Tompkins. Professors Willig and Katz were supported by a Compass Lexecon team that included Jith Jayaratne, Gilad Levin, Taylor Hines, Ani Gupta, and Ziad Kaddouri. Ms. Guerin-Calvert was supported by Susan Manning.

The Compass Lexecon teams worked closely with attorneys at Cravath, Swaine & Moore LLP including Christine A. Varney, David R. Marriott, J. Wesley Earnhardt, Sharonmoyee Goswami, Jesse M. Weiss, and Michael J. Zaken; and with attorneys at Latham & Watkins LLP including Michael G. Egge, Marguerite M. Sullivan, Anna M. Rathbun, David L. Johnson, and Alfred C. Pfeiffer.