Defending hospital mergers after the FTC's unorthodox challenge to the Evanston Northwestern--Highland Park transaction

Examining the Federal Trade Commission's retrospective challenge of a hospital merger in Illinois, the author provides an insightful analysis of one of the agency's major antitrust enforcement initiatives in health care in the last several years. Because the case produced several departures from antitrust orthodoxy, these departures may affect the trials of future hospital mergers that are challenged. The author reviews the methodology and evidence of the case, and he identifies theories and best practices that are important for administrators and legal practitioners to implement in future mergers.     

Toward a definitive antitrust standard for nonprofit hospital mergers

Despite decades of federal and state regulatory efforts to encourage more efficient utilization of hospital resources, recent federal antitrust enforcement actions assert that nonprofit hospital mergers are detrimental to consumers. This policy, however, is derived from misguided attempts to apply the economic assumptions of for-profit industries to the nonprofit hospital sector and to extend statutes enacted to restrain national economic concentration to local nonprofit enterprises. This paper concludes that a rational antitrust enforcement policy that recognizes the unique characteristics of hospital markets can be described within the confines of existing antitrust statutes.     

Applying antitrust law to nonprofit healthcare entities: arguments for a greater attention to detail

This Article begins with an antitrust primer, then analyzes the appropriate application of antitrust principles to nonprofit healthcare providers. In light of the inherent charitable character of nonprofit healthcare providers, the author contends that the government and the courts should accord some deference to nonprofit hospitals when they are seeking approval of mergers. To date, this has not generally been the case, although a few recent court decisions have rested their approval of mergers, in part, upon the nonprofit character of the merging entities. The author, in particular, believes the paradigmatic local nonprofit hospital with a community board is less likely than a for-profit hospital to abuse any market power that it may obtain through a merger; consequently, any such merger should not be analyzed solely under the traditional presumptions of antitrust jurisprudence. Rather, the premerger analysis should involve meaningful consideration of the hospital's charitable character.     

Applying antitrust concepts to the acute care hospital industry: defining the relevant market for hospital services

In considering the possible antitrust implications of a merger of two or more competing hospitals, the courts have generally found that hospitals provide a cluster of services which have significant peculiar characteristics that allow them to be considered a single product market. Spurred by changes in their environments, hospitals during the last decade have become markedly less homogeneous in their range of products and geographic markets. As a result, the impact of hospital mergers in the future may need to be assessed in multiple, more narrowly defined relevant markets, for which several possible definitional bases are suggested in this paper. The increased precision associated with such multidimensional antitrust analysis should permit a more effective consideration of the trade-offs between increases in hospitals' market power and advances in their relative operating efficiency and/or quality of services.     

Community control and pricing patterns of nonprofit hospitals: An antitrust analysis

Traditional control of nonprofit hospitals by the communities they serve has been offered as justification for restraining antitrust enforcement of mergers that involve nonprofit hospitals. The community is arguably a constraint on a nonprofit's inclination to exercise market power in the form of higher prices; however, community control is likely to be attenuated for hospitals that through merger or acquisition become members of hospital systems--particularly those that operate on a regional or multiregional basis. We report findings from a study in which we examined empirically the relationship between market concentration and pricing patterns for three types of nonprofit hospitals that are distinguishable based on degree of community control: an independent hospital, a member of a local hospital system, and a member of a nonlocal hospital system. Study results indicated that when conditions existed to create a more concentrated market, (1) all three types of nonprofit hospitals exercised market power in the form of higher prices, and (2) hospitals that were members of nonlocal systems were more aggressive in exercising market power than were either independent or local system hospitals. The results have important implications for antitrust enforcement policy.     

Contesting anticompetitive actions taken in the name of the state: state action immunity and health care markets

The so-called state action doctrine is a judicially created formula for resolving conflicts between federal antitrust policy and state policies that seem to authorize conduct that antitrust law would prohibit. Against the background of recent commentaries by the federal antitrust agencies, this article reviews the doctrine and discusses its application in the health care sector, focusing on the ability of states to immunize anticompetitive actions by state licensing and regulatory boards, hospital medical staffs, and public hospitals, as well as anticompetitive mergers and agreements. Although states are free, as sovereign governments, to restrict competition, the state action doctrine requires that "the state itself" make the decision to do so. Partly on the basis of problems in the political environment, the article criticizes courts for using a mere "foreseeability" test to decide whether a state legislature sufficiently authorized competitors to act in contravention of clear federal policy: "Few things are more foreseeable than that a trade or profession empowered to regulate itself will produce anticompetitive regulations."     

平台扼杀式并购的反垄断法规制

全球大型数字平台通过"复制、收购与扼杀"的策略扼杀并购了大量初创企业,引发了创新赛道垄断的顾虑。初创企业并购通常不会引起显著的市场结构变化,但随着时间推移,平台"切香肠式"的扼杀式并购,在扼杀潜在竞争对手、强化自身市场支配地位的同时,更会扭曲长期创新供给,致使未来市场可竞争性丧失。而并购效率改进收益的消亡、创业者奖励作用的证伪与动态竞争约束工具的全面失灵,进一步要求反垄断执法机构应摒弃目前普遍不作为的监管做法,及时识别与规制平台扼杀式并购。对此,有必要引入内部文档调查、并购价格组成分析等并购动机过滤机制,识别出那些出于消除未来竞争威胁或扼杀潜在迭代式创新目的的初创企业并购;同时,通过引入补充性的申报门槛、设定更具针对性的审查补救措施与授权必要的事后调查,将能有效地遏制平台资本的无序扩张,为初创企业创造一个不受主导平台扼杀式并购威胁的现代化营商环境。     

Hospital mergers: the shift from federal antitrust enforcement to state regulation

The authors examine and analyze the burgeoning merger activity in the hospital arena, as well as the nonfederal attempts made to regulate that activity. They conclude that the present, ad hoc, system of state regulation is sorely wanting and that it would be preferable if stronger antitrust enforcement and judical decisions prevented competition reducing mergers. If a merger results in a true monopoly (and nonetheless passes antitrust scrutiny), its regulation should be the responsibility of the pertinent state public utility board which, unlike the courts and state attorneys general, has sufficient expertise to adequately regulate the merged entities. Otherwise, the faults of the present system, which is easily manipulated by hospitals seeking political and legal cover for their activities, are likely to be perpetuated.     

Antitrust and hospital mergers: does the nonprofit form affect competitive substance?

Following a string of government losses in cases challenging hospital mergers in federal court, the Federal Trade Commission and the Department of Justice issued their report on competition in health care seeking to set the record straight on a number of issues that underlie the judiciary's resolution of these cases. One such issue is the import of nonprofit status for applying antitrust law. This essay describes antitrust's role in addressing the consolidation in the hospital sector and the subtle influence that the social function of the nonprofit hospital has had in merger litigation. Noting that the political and social context in which these institutions operate is never far from the surface, it takes issue with the proposal to cabin merger doctrine so as to deny the significance of nonprofit status in merger analysis. Given the dynamic change in the regulatory climate and heterogeneity of local health care markets, it advises courts not to accept the FTC's preemptive standard regarding the significance of hospitals' nonprofit status and keep open the possibility of fashioning new presumptive rules tailored to more complete economic accounts of nonprofit firm behavior.     

Special report on antitrust. Criminal antitrust enforcement--when, who, and why?

Government civil antitrust enforcement and private antitrust litigation are not always easy to avoid, because even innocent actions can be alleged to have been improperly motivated or to adversely affect competition. On the other hand, criminal antitrust violations can be readily avoided by following a set of basic, simple, and easy to remember rules: 1. Providers should not agree with competing or potentially competing providers on any terms of price, quantity, or quality of service; 2. Providers should not agree with competing or potentially competing providers as to which patients (or payors) will be served, what kinds of services will be offered, or where to locate offices or facilities; and 3. Providers should not agree with competing or potentially competing providers to refuse to offer services to payors or other alternative delivery systems. There are circumstances in which exceptions to these general rules are appropriate, such as when an agreement among providers is necessary in order to participate in a legitimate alternative delivery system, preferred provider organization, or individual practice association. However, these exceptions are narrow and technical. The best advice is the following warning to providers by Charles F. Rule, former U.S. Assistant Attorney General for antitrust: "You should never act as if an exception applies until after you have consulted an experienced antitrust lawyer or until you have obtained adequate assurance that competent counsel has structured the system to eliminate antitrust problems."     

The state action doctrine and the Local Government Antitrust Act: the restructured public hospital model

This Article analyzes the development and complexities of the antitrust state action doctrine and the Local Government Antitrust Act as these doctrines apply to both "municipalities" and private entities. The restructuring of a public hospital is used as a model to facilitate the antitrust analysis. The restructuring model, which typically involves the leasing of a hospital facility by a public entity to a private nonprofit corporation, offers the unique opportunity to compare the different standards employed under the state action doctrine and the Local Government Antitrust Act. As a practical matter, the Article provides a framework for a public hospital to evaluate the impact of corporate restructuring on its antitrust liability exposure and to develop strategies to minimize antitrust risks.     

Hospital mergers and antitrust: an economic analysis

The hospital industry has recently experienced substantial merger activity. This paper examines several actual and proposed hospital mergers to determine the extent of competition in the affected markets and the effect these mergers may have on competition. Our focus is on mergers between hospitals in the same market. We define the relevant product and geographic market for hospitals, then develop criteria for evaluating hospital mergers and analyze several merger cases using these criteria. We conclude that these mergers threaten the competition that exists in most of the markets discussed, and that the claimed efficiency justification for mergers is not convincing.     

CAUSATION IN EC MERGER CONTROL

"there are ever so many ways that a world might be; and oneof these many ways is the way that this world is" (David Lewis,1986)

This article looks at two areas of merger control under EC Lawwhere the principles of causation are applied and, in our view,misapplied. The article traces the development of the conceptof the "counterfactual" in antitrust law. It then draws on thisanalysis in considering the operation of the "failing firm defense,"and in particular the standard of proof employed by the Commissionwhen analyzing the "counterfactual" in relation to the failingfirm defense. We argue that the Commission employs an excessivelyhigh standard of proof, and that this standard of proof contributesto the drawing of the failing firm defense too narrowly, througha misapplication of the principles of causation. We then proceedto contrast and prefer the approach of the UK Competition Commissionin recent cases. In the final part of the article we considerscenarios where two or more mergers are contemplated in thesame market at the same time, in cases of both parallel andoverlapping mergers. In these complicated scenarios, which requireprospective, multifaceted analysis, we set out in detail how,despite inherent difficulties, a similarly rigorous applicationof the principles of causation produces coherent results.     

Why don't courts treat hospitals like tanks for liquefied gases? Some reflections on health care antitrust enforcement

In this article, I use the Federal Trade Commission and the Department of Justice 2004 report Improving Health Care: A Dose of Competition as an occasion to comment on two specific issues that have arisen in health care antitrust: the recent string of losses by the enforcement agencies in hospital merger cases and an antitrust exemption for physicians to bargain collectively with health insurers. One of the more salient facts about health care antitrust enforcement is the notable recent lack of success of the enforcement agencies in hospital merger cases. This may be due to judges and juries holding views of hospital markets as being different from markets for other goods and services. My conclusion is that hospitals are an industry with unique attributes, but nothing about the specifics of the health care industry suggests that the unregulated use of market power in this industry is socially beneficial. As a consequence, the antitrust laws should be enforced here as in any other industry. Countervailing power is an issue that has come to the fore in health care antitrust. Physicians have explicitly asked for legislative exemption from the antitrust laws in order to bargain collectively with insurance companies, as a means of counteracting insurers' monopsony power. It is not clear that health insurers possess significant monopsony power. Even if they do, bestowing monopoly power on physicians will not necessarily improve matters. Active antitrust enforcement in insurance markets is the correct response, not blanket exemptions for providers.     

20世纪90年代以来的合并控制理论探析

为了适应 20世纪 90年代以来并购活动的日益增长,规制者运用“革新市场”和“单方效果”来支持积极的反托拉斯执法活动。“革新市场”理论通过对一个合并对相关市场上的研究和发展的影响来评估技术领先企业之间的合并。“单方效果”理论根据合并企业独自对相关市场上价格产生影响的能力来评估一个合并。     

THE CHURCH REPORT'S ANALYSIS OF VERTICAL AND CONGLOMERATE MERGERS: A REPLY TO COOPER, FROEB, O'BRIEN, AND VITA

I respond to concerns raised by James Cooper, Luke Froeb, DanO'Brien, and Michael Vita regarding the analysis of verticaland conglomerate mergers contained in my report to the EuropeanCommission. I address their arguments that the raising rivals'costs literature does not support an aggressive stance on verticalmergers; that market power is a necessary, but not a sufficient,condition for a non-horizontal merger to raise antitrust concerns;and that efficiencies intrinsic to a non-horizontal merger shouldbe treated in the second step of the proposed structured ruleof reason framework.     

Doctors and hospitals: an antitrust perspective on traditional relationships

Under new pressures for cost containment, hospitals are increasingly asserting interests that conflict with those of physicians. Professor Havighurst argues that legal rules under which practitioners have challenged denials of hospital admitting privileges should be clarified in order that hospitals can more effectively carry out their new cost-containment and other responsibilities. He invokes antitrust law's "essential-facilities" doctrine to protect those abused by their competitors on a hospital staff, but he contends that, if a hospital participates in decisionmaking as an independent actor--even though it acts in concert with its physicians--, antitrust courts should lower the level of scrutiny to a point at which most challenges can be dismissed summarily. He analogizes restraints imposed by hospitals on competition between health professionals to vertical restraints of other kinds, and draws conclusions critical of doctrine traditionally applicable to the latter.     

反垄断法的价值构造

价值问题是反垄断立法和实施中的核心和前置性问题,在当前中国反垄断法实施面临制度分裂、"纸面上的法"与"行动中的法"相背离等背景下,对这一话题的研讨尤为重要。成熟反垄断法律制度的实体价值主要表现在自由、效率和公平等诸方面,在经济理性的作用下,这些价值呈并存、竞争和融合的矛盾运动之势。受制于政治、经济、社会文化以及制度等因素的影响,中国反垄断法表现出来的自由价值和经济理性等先天不足,是该法实施乱象的重要根源,亟待通过制度实践和竞争文化培育凝聚更多价值共识。     

Ball Memorial Hospital: Section 2 Sherman Act analysis in the alternative health care delivery market

In 1986, the Seventh Circuit Court of Appeals in Ball Memorial Hospital v. Mutual Hospital Insurance denied an injunction sought under the antitrust laws by the plaintiffs, eighty acute care hospitals, which would have precluded Blue Cross and Blue Shield of Indiana from implementing a Preferred Provider Organization. The Ball court used a conservative economic analysis to deny the injunction and failed to consider many industry-specific factors. This Note examines these factors and challenges the Ball court's position by arguing that antitrust scrutiny of alternative health care delivery markets must go beyond the court's narrow approach.     

关于美国横向并购反垄断审查政策最新发展的述评

2010《横向并购指南》体现了美国政府关于横向并购反垄断审查政策最新发展。一方面,2010《指南》维持了1992《指南》中一些重要的方面,同时,2010《指南》也对1992《指南》作出了较大的修改。2010《指南》所体现的横向并购反垄断审查政策和以前相比,审查重点有所变化,审查过程更灵活,分析工具更多元化,审查中考虑更多的因素,审查范围会更广,而审查的门槛也有所提高。