Federal Trade Commission Upholds Challenge to ProMedica’s Acquisition of St. Luke’s

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On March 28, 2012, the FTC upheld the Administrative Law Judge (ALJ)’s December 5, 2011 administrative decision that required ProMedica to divest itself of St. Luke’s Hospital by a vote of 4-0. This case is part of a series of recent cases brought by the FTC in the health care sector, indicating a continuing trend of heightened FTC scrutiny of provider combinations.

Toledo, Ohio-based ProMedica acquired St. Luke’s, located in Maumee, Ohio, in August 2010 in a non-reportable acquisition. In January 2011, the FTC announced its intent to challenge the $156 million acquisition, which, according to the FTC, gave ProMedica control of nearly 60% of the market for general acute-care inpatient hospital services and over 80% of the market for obstetrical services. In March 2011, the U.S. District Court for the Northern District of Ohio enjoined the transaction. On December 5, following a full administrative trial on the merits, an ALJ concluded that the transaction would “substantially lessen competition,” in violation of Section 7 of the Clayton Act. ProMedica appeals that decision to the Commission (currently there are four FTC Commissioners).

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