Mergers and acquisitions can offer a great deal of benefit to consumers and to early-stage industries which are ripe for growth. However, they also make regulators nervous. In a recent article for Forbes.com, Proven Media Solutions founder Dustin Siggins examined how the Federal Trade Commission is fighting the re-merger of a cancer research company and its former start-up in a classic case of government vs business.
Illumina, Inc. is a biotechnology company that specializes in developing cancer-fighting treatments. It is seeking to bring its former start-up Grail, the maker of an early cancer detection test, under its corporate umbrella. The Federal Trade Commission has blocked merger, which could help bring Grail’s technology to a broad market, because of monopoly and market-concentration concerns.
However, free-market advocates view the Illumina-Grail acquisition as “vertical merger” no different than a restaurant chain buying its produce supplier. Such a merger could introduce cost-saving efficiencies for the manufacture and distribution of a product. A “horizontal merger,” on the other hand, would involve a company buying a competitor to gain a greater market share.
The FTC argues that rejoining Illumina would give Grail considerable market advantages. However, critics of the FTC’s action believe a protracted regulator battle only slows innovation in a field where research is working to fight a disease that cost the lives of over 600,000 Americans last year.
Read the full article here.