With merger-and-acquisition activity among hospitals picking up speed from coast to coast, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) last week issued revised horizontal merger guidelines--marking the first major revision in 18 years. The guidelines are designed to help hospitals understand how federal antitrust agencies evaluate the likely competitive impact of proposed mergers and whether mergers comply with U.S. antitrust law.
"A primary goal of the 2010 guidelines is to help the agencies identify and challenge competitively harmful mergers while avoiding unnecessary interference with mergers that either are competitively beneficial or likely will have no competitive impact on the marketplace," the agencies said in a joint statement. "To accomplish this, the guidelines detail the techniques and main types of evidence the agencies typically use to predict whether horizontal mergers may substantially lessen competition."
The FTC commissioners voted to approve the new guidelines 5-0. "The new guidelines provide a clearer and more accurate explanation to merging parties, courts, and antitrust practitioners of how the agencies review transactions," noted Chairman Jon Leibowitz. "First, the guidelines emphasize the competitive effects of a deal over the more rigid, formulaic approach imposed by some interpretations of the 1992 Guidelines. Second, for the first time the guidelines provide a clear description, and many examples, of the range of evidence the agencies consider when evaluating the competitive effects of a transaction. Third, the guidelines explain in more detail the role of market-concentration measures and revise the concentration thresholds from which the agencies will draw inferences about the likely effects of a merger on market power. Finally, the new guidelines contain revised discussions of several factors that may be important in analyzing a merger, among them innovation and product variety, coordinated effects, price discrimination, and market entry."
However, at least one FTC Commissioner believes the guidelines are flawed, reports The BLT: The Blog of Legal Times. Commissioner J. Thomas Rosch issued a critique, stating the guidelines place too much emphasis on economic evidence including margins and prices, and insufficient attention to empirical evidence and non-price competitive effects.
To learn more:
- read the new guidelines
- read this FTC press release
- read this post at The BLT: The Blog of Legal Times
- read Commissioner Rosch's statement
- read FTC Chairman Leibowitz's statement