FTC and Pennsylvania v. Penn State Hershey Medical Center, 838 F.3d 327 (3d Cir. 2016)
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.
United States and Connecticut v. AMC Entertainment Holdings, Inc., No. 1:15-cv-02181 (D.D.C. Dec. 15, 2015)
U.S. and Connecticut filed complaint and proposed settlement with AMC Entertainment Holdings, Inc. (AMC) and SMH Theaters, Inc. (Starplex Cinemas) to resolve concerns that AMC’s purchase of a Connecticut Starplex theater would substantially harm competition for Connecticut consumers. AMC is the second largest commercial movie exhibitor in the United States, with two theaters in Connecticut. Starplex Cinemas is an independent, privately held commercial movie exhibitor operating 33 theaters with 346 screens in 12 states, including two theaters in Connecticut. In their complaint, Connecticut and the DOJ allege that the Berlin market is concentrated and that AMC and Starplex Cinemas are the other’s most significant competitor, given their close proximity. The agreement with Connecticut and the DOJ requirew that the Berlin 12 theater in Berlin be sold as part of the acquisition, which will help to maintain a competitive market and the best-possible service for Connecticut consumers. The agreement also requires the divestiture of a theater in New Jersey.
State of West Virginia ex rel., Darrell v. McGraw, Jr., Attorney General v. Acordia of West Virginia, Inc., No. 04-C-115 (Cir. Ct. Hancock Cty. WV)
In 2004, the State filed suit,claiming that certain insurance practices related to the placement of insurance policies violated the State of West Virginia’s Antitrust and Consumer Credit and Protection Acts. The Attorney General sought damages under the Antitrust Act on behalf of the State, its public agencies, counties, municipalities, and other political subdivisions, and as parens patriae of natural person who are citizens and residents of the State. Case was settled for $8 million to be distributed by WV AG’s office.
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.
State of Maryland v. Johnson & Johnson Vision Care (Cir. Ct. Baltimore Cty Feb. 29, 2016)
State alleged that defendant, responding to requests from eye care professionals to limit competition from discounters, implemented a resale price maintenance policy, which fixed minimum retail prices for all retail sellers of Johnson & Johnson contact lenses. After objections from Costco, a large discount retailer, defendant revised its policy. Under Maryland law, although not federal law, an agreement establishing a minimum retail price is an unreasonable restraint of trade and per se illegal. The parties entered into an Assurance of Discontinuance under which Johnson & Johnson permanently discontinued the RPM agreements alleged and agreed to pay $50,000 in civil penalties.
People of the State of New York v. Actavis, PLC et al., No. 14-CV-7473 (RWS)(S.D.N.Y filed Dec. 10, 2014)
Plaintiff state sued pharmaceutical manufacturer Actavis plc and its New-York based subsidiary Forest Laboratories seeking an injunction to prevent them from withdrawing the Alzheimer’s drug Namenda from the market and switching patients to a once daily version, Namenda XR. Namenda’s patent will expire in July 2015 and the company thereafter faces competition from generic drug makers. According to the complaint, Actavis planned to force patients to switch unnecessarily to Namenda XR because it had a longer patent. Once patients switch to Namenda XR, it would be difficult for patients to switch drugs again once generics become available. Normally, state substitution laws allow pharmacists to dispense generics without being forced to obtain physician approval. According to the complaint, even though Namenda and Namenda XR have the same active ingredient, pharmacists will not be allowed to offer generic Namenda to patients taking Namenda XR; a doctor’s approval would be required to make that switch. This means that most Alzheimer’s patients and their families will remain on Namenda XR. The lawsuit alleges that, by forcing patients to switch to Namenda XR, Actavis is gaming the regulatory system that governs pharmaceuticals and violating antitrust laws designed to encourage competition and keep prices down for consumers. In December 2014, the district court enjoined Actavis from ceasing production of Namenda, and the injunction was affirmed by the Second Circuit in May 2015.
In the Matter of Cabell Huntington Hospital, Inc.’s Acquisition of St. Mary’s Medical Center, No. 15-C-542, Cabell Cty. Ct., WV
The attorney general reached an agreement with two hospitals in the Huntington WV area who were merging. The agreement requires, among other things 1) that St. Mary’s Medical Center will be maintained as a free-standing, general acute care, faith-based organization for the seven-year period;2) Neither hospital will increase its service rates beyond the benchmark rate established by the West Virginia Health Care Authority; 3) If the combined operating margins of the hospitals exceed an average of 4 percent during any three-year period, the hospitals’ rates will be reduced by the amount of excess for the following three years; 4) Both hospitals will release employees from any non-compete agreements following the termination of their employment 5) The hospitals will maintain open staffs and grant privileges to all qualified physicians, and not terminate privileges to those who start offering services in competition to the hospitals (excluding groups that historically have operated under exclusive agreements) 6) The hospitals will not oppose the award of a certificate of need by the state Health Care Authority to any health care provider that seeks to provide services in their market area; 7) the hospitals will establish a fully integrated and interactive medical record system at both facilities so that patient encounters can be readily available to physicians at both hospitals; 8) they will notify the Attorney General’s Office within 90 days of any proposed addition or deletion of any health care service line.
Massachusetts v. Partners Healthcare System Inc. et al., no. 14-2033 (Mass. Super. Ct. June 24 2014)
State challenged by acquisition by Partners of South Shore, alleging that it would substantially lessen competition in portions of Eastern Massachusetts for the provision of general acute care inpatient health services in violation of state law. After extensive hearings, the Attorney General proposed a settlement. The court permitted extensive public comment and the settlement was ultimately rejected. The parties abandoned the transaction.
Puerto Rico v. Beltran et al.,
Puerto Rico filed administrative charges against 34 school bus contractors who provided services to the state Department of Education, alleging that they agreed to fix prices and reduce services to a number of municipalities, as well as limiting geographic markets. the parties paid $170,000 and agreed to injunctive provisions to prevent future violations.
Texas v. Benco Dental Supply Company, No. D-1-GN-15-001386 (Travis Cty. Dist. Ct. April 9, 2015)
Plaintiff state alleged that Benco, a dental supply company, and its competitors worked together to thwart the entry of a lower cost, online source of dental supplies provided by the Texas Dental Association. The State alleged that Benco and others colluded to discourage distributors and manufacturers from working with the TDA and its business partner and agreed not to attend the TDA’s annual trade show in 2014. The State’s agreement with Benco requires Benco not to participate in such anticompetitive activities in the future and institutes an antitrust training program for the company. Benco has also agreed to pay $300,000 to reimburse the Attorney General for investigative costs and attorneys’ fees in lieu of any civil penalty.
