Supreme Court Limits State Action Immunity In Federal Trade Commission v. Phoebe Putney Health Systems

by Perkins Coie

In a closely watched decision, a unanimous U.S. Supreme Court has reversed an 11th Circuit decision that invoked the state action doctrine to prevent the Federal Trade Commission (FTC) from challenging a state hospital authorities’ proposed acquisition of a competing hospital.  In its ruling, the Supreme Court held that the State of Georgia’s general grant of power to the authority to acquire hospitals did not reflect a clearly articulated affirmatively expressed policy to make acquisitions that would substantially lessen competition.

The decision has broad applicability to various state agencies, cities, counties, municipalities, and other governmental and private entities that act pursuant to state law, e.g., public and private utilities, hospital districts, communications providers, transportation companies, port authorities and professional associations.


The state action doctrine recognizes a state’s right to impose market restraints that might otherwise violate the antitrust laws.  This immunity may be extended to subordinate governmental entities and private actors who act in accordance with a "clearly articulated and affirmatively expressed" state policy to displace competition.  In 2011, the FTC filed suit to enjoin the proposed consolidation of two of three independent hospitals in a six-county area in Georgia.  The FTC alleged that after the acquisition, the acquiring entity, Phoebe Putney Healthy System, Inc. (Phoebe) and its parent, would have a market share of more than 85% and that the acquisition would substantially reduce competition in the market for acute care hospital services.  Phoebe was owned by the Hospital Authority of Albany-Dougherty County (the Authority).  Under Georgia’s Hospital Authorities Law (the Law), political subdivisions may provide for the operation and maintenance of health care facilities in counties and municipalities of the state.  The Law further permits authorities to “exercise public and essential governmental functions” and delegates to them numerous general powers, including the ability to acquire and lease hospitals.

In denying the FTC’s request for a preliminary injunction enjoining the acquisition and granting the defendants’ motion to dismiss, the district court held that the defendants’ acquisition activity was immune under the state action doctrine.  The 11th Circuit affirmed.  The Supreme Court reversed.

The Supreme Court Holding

In finding that the parties were entitled to state action immunity, the district court and the 11th Circuit relied upon the general powers accorded to the Authority and found that any anticompetitive effect of the acquisition was a ”foreseeable” result of the authority granted by the State of Georgia.  Specifically, the legislature could have “readily anticipated” that the grant of powers to lease and acquire facilities could have an anticompetitive effect.  In reversing the lower court’s decision, the Supreme Court stated that “simple permission to play in a market” does not “foreseeably entail permission to roughhouse in that market unlawfully.”  568 U.S. ___ (quoting Kay Elec. Cooperative v. Newkirk, 647 F.3d 1039, 1043 (10th Cir. 2011).  While the legislature’s intent to displace competition may be implied, it will only be found where the state has “affirmatively contemplated” the displacement and such displacement is the “inherent, logical or ordinary result of the exercise of authority delegated by the state legislature.”  568 U.S. at ____. In Phoebe Putney, the Supreme Court found that such a conclusion could not be reached simply from the general grant of authority under the Law.  The Supreme Court also found that it could not be implied from the unique powers and responsibilities granted to the Authority, such as its eminent domain powers or the certificate of need process required before authorizing any significant expansion in the capacity of medical facilities.

The Implications of the Phoebe Putney Decision

Governmental entities and private entities subject to governmental regulation are advised to review the grant of authority pursuant to which they act, or are seeking to act, and determine whether their conduct is covered by the Supreme Court’s refinement of the clear articulation test.  If the grant of authority is not sufficiently clear, parties may seek further clarification from the legislature or modify their conduct accordingly.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Perkins Coie | Attorney Advertising

Written by:

Perkins Coie

Perkins Coie on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.