Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS—M.D. Pa.: FTC must disclose objecting witness in action to enjoin health systems merger, (Mar 1, 2016)

By Michael Menzhuber, J.D., LL.M.

The identity of an FTC witness was required to be disclosed in litigation to enjoin the merger of two Pennsylvania health systems, according to a magistrate judge for the federal district court in Harrisburg, Pennsylvania (Federal Trade Commission v. Penn State Hershey Medical Center, February 29, 2016, Carlson, M.).

Pursuant to litigation involving an attempt by the FTC to enjoin a corporate merger of Penn State Hershey Medical Center and PinnacleHealth System, the parties entered into a protective order governing confidential information. The order provided that the FTC’s counsel was to notify the defense counsel whether they reserved the right to rely on any information provided by witnesses that had objected to the disclosure of their identities and the defendants were required to designate the in-house counsel to whom the identity of such witnesses would be disclosed.

The order also provided that the defendants’ designated in-house counsel would: (1) attest that they did not take part in competitive decision making; (2) be bound by the terms of any prior protective order; (3) not use the confidential information for any purpose other than defending the FTC litigation; and (4) acknowledge that they may be subject sanctions, including contempt, for violations of the order.

The FTC’s counsel timely objected to the disclosure of a potential witness who had previous unsuccessful business dealings with in-house counsel and had voiced a concern that counsel might affect future business referrals to the witness. The magistrate, however, determined that disclosure of the identity of the witness was appropriate because the in-house counsel: (1) followed the required procedures; (2) attested to not being involved in referral decisions relating the prospective witness; and (3) agreed to the limitations imposed on the use of the information.

The case is No: 1:15-CV-2362.

Attorneys: Gerald A. Stein for the Federal Trade Commission. Tracy W. Wertz (Pennsylvania Office of Attorney General) for Commonwealth of Pennsylvania. Adrian Wager-Zito (Jones Day) for Penn State Hershey Medical Center and Pinnaclehealth System.

Companies: Commonwealth of Pennsylvania; Penn State Hershey Medical Center; Pinnaclehealth System

Cases: AcquisitionsMergers Antitrust FederalTradeCommissionNews PennsylvaniaNews