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FTC Orders Divestiture in Consummated Hospital Acquisition
On March 22, the Federal Trade Commission (FTC)
ruled ProMedica Health System's August 2010 acquisition of
rival St. Luke's Hospital was anticompetitive and "likely
to substantially lessen competition and increase prices for general
acute-care inpatient hospital services and inpatient obstetric
services sold to commercial health plans in the Toledo, Ohio
area." ProMedica had consummated its acquisition of St.
Luke's, but did so under a hold-separate agreement designed to
preserve the hospital as an independent competitor during the
FTC's investigation into potential anticompetitive effects of
the transaction. As
previously reported, the FTC ultimately challenged the
transaction. In its recent ruling, the FTC rejected ProMedica's
claim that St. Luke's was operating at a financial loss and
could not remain competitive absent the transaction, determined
that the acquisition would lead to higher prices for consumers and
ordered ProMedica to sell St. Luke's to an FTC-approved
buyer within 180 days. This case is yet another reminder that the
FTC is continuing to aggressively investigate and challenge
hospital mergers in what it views to be concentrated markets.
DG Competition Publishes Manual of Procedures for Application
of EU Competition Laws
In March 2012, the European Commission's Directorate-General
for Competition (DG Competition) published a
manual of procedures for the application of Articles 101 and
102 of the Treaty on the Functioning of the European Union (TFEU),
the EU's core competition laws. DG Competition is primarily
responsible for enforcing Articles 101 and 102 TFEU, and the manual
is intended to serve as a practical working tool that can provide
non-binding guidance to staff on how to conduct an antitrust
investigation. Topics covered by the manual include cooperation
with competition authorities in other countries, sector inquiries,
dealing with leniency applications, access to files and
confidentiality, remedies and fines, and guidance letters. The
manual will be updated regularly to reflect new experience gained
in applying the EU competition laws.
ECJ Addresses Below-Cost Pricing Issues
On March 27, the Court of Justice of the European Union (ECJ)
issued a ruling concerning below-cost pricing by a dominant
company. The ECJ distinguished between average total costs
attributed to the activity concerned and average incremental costs
pertaining to that activity, and confirmed that a dominant firm
will not violate EU competition law if it sells below total cost so
long as it charges above its incremental cost. Abuse of dominance
requires a showing that the company intended to eliminate a
competitor from the market as a result of its pricing strategies.
Additional information is available in our
April 2012 EU Competition Law Compliance Update.
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An interesting and growing debate in the antitrust arena is whether most favored nation ("MFN") pricing provisions are pro-competitive or anticompetitive. For many years, MFN provisions have been considered a fairly noncontroversial contract term included by purchasers in an attempt to assure that other buyers do not receive a more favorable price.
A well-attended program on antitrust treatment of "bundled pricing" and "loyalty discounts" at the American Bar Association Antitrust Section Spring Meeting highlighted the confusion generated by the antitrust law implications.
In remarks made this week at the International Competition Network annual conference, Federal Trade Commission (FTC) Chairwoman Edith Ramirez stated that health care will continue to be a top priority for the FTC.
An EU General Court (GC) judgment has considered the difficult issue of independent parallel behaviour by competitors under EU competition law, and in particular when this strays into a "concerted practice".
The U.S. Department of Justice ("DOJ") has reached a settlement with Anheuser-Busch InBev ("ABI") and Grupo Modelo S.A.B. de C.V. ("Modelo"), requiring ABI to divest Modelo’s entire U.S. business to Constellation Brands Inc. ("Constellation").
Microsoft v. Motorola is precedential only in the Western District of Washington, but at 207 thorough and well-reasoned pages, it provides a valuable roadmap and will likely be quite influential in future RAND cases in other U.S. and foreign jurisdictions.
Nearly a year ago the Kansas Supreme Court issued a ruling that boldly separated Kansas, and its state antitrust law, from prevailing federal antitrust precedent in matters of resale price agreements.
