FTC and Illinois v. Advocate Health Care Network

The FTC administratively challenged the proposed merger of Advocate Health Care Network and NorthShore University HealthSystem, alleging it would create the largest hospital system in the North Shore area of Chicago. According to the complaint, the combined entity would operate a majority of the hospitals in the area and control more than 50 percent of the general acute care inpatient hospital services. The FTC and the State of Illinois filed for a preliminary injunction to prevent the merger before the FTC’s administrative trial. The district court denied the motion for preliminary injunction based on a finding that “plaintiffs ha[d] not shouldered their burden of proving a relevant geographic market.” The state and the FTC appealed. The 7th Circuit reversed and remanded the case. The court of appeals held that the district court’s geographic market finding was clearly erroneous, and approved the hypothetical monopolist test. The court also cited the “silent majority” fallacy, which overlooks the market power of the patients who are not willing to travel for hospital care.

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