U.S. DOJ and plaintiff states sued to block the merger of two of the country’s largest health insurers. According to the complaint, alleges that their merger would substantially reduce Medicare Advantage competition in more than 350 counties in 21 states, affecting more than 1.5 million Medicare Advantage customers in those counties. Before seeking to acquire Humana, Aetna had pursued aggressive expansion in Medicare Advantage. Aetna, the nation’s fourth-largest Medicare Advantage insurer by membership, has nearly doubled its Medicare Advantage footprint over the past four years. Humana is the nation’s second-largest Medicare Advantage insurer by membership. The lawsuit also alleges that Aetna’s purchase of Humana would substantially reduce competition to sell commercial health insurance to individuals and families on the public exchanges in 17 counties in Florida, Georgia and Missouri, affecting more than 700,000 people in those counties. The lawsuit alleges that by buying Humana, Aetna would eliminate one of its strongest and most capable competitors in these markets. The district court granted the injunction, rejecting the parties arguments that the Medicare Advantage and Medicare programs were competing products that constrained one another’s prices, and noting that Aetna’s exit from several markets, allegedly because of the Affordable Care Act, appeared to be designed to eliminate a problem with the merger, rather than being an unrelated business decision.
Commonwealth of Pennsyvlania v. Chesapeake Energy Corp, No. 2015IR0069 (Ct. Comm. Pleas, Bradford Cty, 2015)
State filed action in state court alleging market allocation agreement affecting leases for hydraulic fracturing on land in central Pennsylvania. The state alleged that the failure to disclose the agreement violated state consumer protection laws, and that the agreement itself violated Pennsylvania antitrust common law. After defendants argued that Pennsylvania has no state antitrust statute, the state filed an amended complaint which included claims of violations of the federal antitrust laws. Defendants sought removal.
Eighteen plaintiff states and the FTC challenged the merger of Dollar Tree, the largest chain of “dollar” stores (deep discount stores) and Family Dollar Stores, the nation’s third largest dollar store chain. The complaint claimed the proposed acquisition would substantially lessen competition in numerous markets by: (1) eliminating direct and substantial competition between Dollar Tree and Family Dollar; and (2) increasing the likelihood that Dollar Tree will unilaterally exercise market power. This, according to the complaint, would violate Section 7 of the Clayton Act and each state’s applicable antitrust and consumer protection laws. The states sought a permanent injunction to prevent the merger, along with costs and attorney fees. The parties reached a settlement under which 330 stores in the 18 states would be divested to Sycamore partners and run as a new dollar store chain, Dollar Express. The agreement also required the defendants to report future acquisitions in any of the affected markets and to pay over $865,000 to reimburse the costs and fees of the plaintiff states.
Pennsylvania filed suit, alleging the proposed merger of two of the largest gasoline and distillate terminaling services in the state, ArcLight and Gulf Oil would violate both the Clayton Act and Pennsylvania state law by lessening competition in three markets, Altoona, Harrisburg and Scranton. The state sought injunctive relief and attorneys’ fees. The state and the parties entered into a settlement in which the defendants would agree to divest their terminal assets in Pennsylvania – located in Altoona, Pittston, Mechanicsburg and Williamsport – to New York-based Arc Logistics within 20 days of the acquisition being finalized. After the divestiture, ArcLight is further bound to assist Arc Logistics by providing transitional assistance at a reasonable cost for one year, serve as a customer of the divested terminals for two years and supply ethanol and biodiesel fuels and related terminaling services for five years. The settlement also allows any ArcLight petroleum terminal customer to sever its contract with the company without penalty or charge for six months after the divestiture date, and for ArcLight to provide them with notice of the right to do so. The FTC had previously entered into a settlement with the parties.
The FTC administratively challenged the combination of Penn State Hershey Medical Center and PinnacleHealth System, alleging that the merger would substantially reduce competition for general acute care inpatient hospital services in the area surrounding Harrisburg, Pennsylvania, leading to higher costs and reduced quality. The FTC and Pennsylvania filed a motion for preliminary injunction in federal court in Pennsylvania. The court denied the motion by the FTC and Pennsylvania in an opinion filed under seal, holding that the plaintiffs did not properly define the relevant geographic market. The FTC and Pennsylvania appealed to the 3rd Circuit, which reversed the district court and granted the preliminary injunction. The Third Circuit rejected the District Court’s reasoning on all counts: market definition, the relevance and persuasiveness of the parties’ 5-year contracts with payers, whether the claimed efficiencies were cognizable and potentially sufficient to overcome the government’s prima facie case, and how the equities should be balanced in an FTC preliminary injunction proceeding. The parties abandoned the merger. The 3d Circuit denied Pennsylvania’s claim for attorneys’ fees on the grounds that the relief was granted under FTC Act Sec. 13(b), which does not authorize attorneys’ fees to prevailing parties.
The FTC and states alleged that the companies had entered into a “pay-for-delay” arrangement, whereby Perrigo paid Alpharma to withdraw its generic version from the market for Children’t ibuprofen.According to the complaint, in June 1998, Perrigo and Alpharma signed an agreement allocating to Perrigo the sale of OTC children’s liquid ibuprofen for seven years. In exchange for agreeing not to compete, Alpharma received an up-front payment and a royalty on Perrigo’s sales of children’s liquid ibuprofen. The FTC received $6.25 million to compensate injured consumers. The states received $1.5 million in lieu of civil penalties. the parties were enjoined from future agreements.
USDOJ and Pennsylvania filed suit to challenge the acquistion by Sinclair Broadcase Group of Perpetual Corporation, alleging that it would lessen competition in the sale of broadcast televlsion spot advertising in the south central Pennsylvania area. The merged companies would control 38 percent of the advertising market in that area. the parties agreed to the divestiture of a station in the marketing area.
SCI, the nation’s largest funeral home chain, sought to acquire Stewart Enterprises, another large funeral home chain. Seven states and the FTC entered into consent agreements with SCI specifying which funeral homes would be divested in 59 separate markets. In a separate consent agreement, SCI agreed to provide the state plaintiffs with the same notices, requirements for approval and compliance review as to divestitures and future acquisitions included in the FTC’s consent decree and to pay the state’s costs and attorneys’ fees..
US DOJ and plaintiff states filed a complaint in federal court challenging the proposed merger between American Airlines and U.S. Airways. The complaint alleged the proposed merger would result in decreased competition, higher airfares and fees, reduced service and downgraded amenities. The dollar impact nationwide could exceed $100 million a year. The merger would make a combined U.S. Airways/American Airlines the largest worldwide carrier and reduce the number of the larger “legacy” airlines from four to three – U.S. Airways/American, United/Continental and Delta/Northwest – and the number of major airlines from five to four. If the merger were approved, the three remaining legacy airlines combined with Southwest Airlines would account for more than 80 percent of domestic travel. American Airlines is U.S. Airways’ chief competitor in the marketplace, meaning that the merger will likely only serve to increase fares and fees. Texas settled its case, entering into an agreement under which the merged airlines would maintain their operations at Texas airports, maintain DFW as a hub, and maintain its corporate headquarters in the Dallas area. DOJ and the remaining states reached settlements with the merging parties. The settlement requires US Airways and American to divest or transfer to low cost carrier purchasers approved by the department: 1) All 104 air carrier slots (i.e. slots not reserved for use only by smaller, commuter planes) at Reagan National and rights and interest in other facilities at the airport necessary to support the use of the slots; 2) Thirty-four slots at LaGuardia and rights and interest in other facilities at the airport necessary to support the use of the slots; and 3) Rights and interests to two airport gates and associated ground facilities at each of Boston Logan, Chicago O’Hare, Dallas Love Field, Los Angeles International and Miami International. The settlement reached by the states requires maintenance of existing hubs in those states, consistent with their historical operations, for three years, and continued daily service for five years to each airport in the affected states that American and US Airways serviced at the time of filing.
Commonwealth of Pennsylvania v. Geisinger Health System Foundation et al., No. 1:13-cv-02647 (M.D. Pa. Oct. 25, 2013)
State challenged merger of two hospitals that would have reduced competition in two Pennsylvania counties. Hospitals agreed to settlement.