FTC Successfully Challenges ProMedica-St. Luke’s Merger

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On December 5, 2011, the FTC obtained an administrative decision that requires ProMedica to divest itself of St. Luke’s Hospital. The Administrative Law Judge (ALJ)’s 246-page opinion, which was released to the public on January 5, 2012, is available at: http://www.ftc.gov/os/adjpro/d9346/120105promedicadecision.pdf. Although this case is only the second filed FTC hospital merger challenge since 2007, it is part of a series of recent cases brought by the FTC in the healthcare sector, indicating a continuing trend of heightened FTC scrutiny of provider combinations.

ProMedica acquired St. Luke’s in August 2010 in a non-reportable acquisition. In January 2011, the FTC announced its intent to challenge the deal, 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, and 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.

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