Supreme Court to Hear FTC Challenge to Georgia Hospital Merger


On June 25, the United States Supreme Court granted the Federal Trade Commission’s request that it review the 11th Circuit’s decision in Federal Trade Commission v. Phoebe Putney Health System. The case involves the FTC’s failed attempt to enjoin the merger of two southwest Georgia hospitals – Phoebe Putney and Palmyra Medical Center – on competitive grounds, and raises significant antitrust immunity issues.

Significantly, as explained in the FTC’s petition for certiorari, the 11th Circuit rejected its claim despite agreeing with the FTC that the transaction would likely lessen competition for hospital services in Albany County. In reaching this rather surprising result, the 11th Circuit held that, regardless of its potential competitive implications, the transaction was immune from FTC challenge based upon the “State Action Doctrine,” a state sovereignty principle that immunizes state entities from the antitrust laws when they act pursuant to a “clearly articulated state policy” to replace competition with regulation. The Doctrine was implicated in this case because the local Hospital Authority was nominally the purchaser in the transaction (using Phoebe Putney funds to pay Palmyra and then agreeing to lease Palmyra to Phoebe Putney for a dollar a year for 40 years).

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