Antitrust Law Daily Wrap Up, ANTITRUST NEWS: AAI urges Massachusetts court to adopt public comment process for hospital merger settlement, (Jun 26, 2014)

By Linda O’Brien, J.D., LL.M.

The American Antitrust Institute (AAI) announced today that it has asked a Massachusetts Superior Court judge to adopt a process for public comment on the proposed settlement of a complaint brought by the Massachusetts Attorney General, challenging the acquisition by Partners Healthcare Systems Inc.’s of South Shore Hospital and Hallmark Health System. The settlement does not require any divestitures, but rather imposes behavioral remedies, including component contracting, growth restrictions, and price caps, according to the AAI. A hearing on the settlement is set for June 30.

In a letter to the court, the AAI pointed out that “the complaint and other filings make clear that the acquisitions are anticompetitive and illegal and would raise prices. Implicit in the loss of competition between Partners and the acquired hospitals is also a likelihood of reduced quality and accessibility of healthcare services for consumers in the Commonwealth.”

The AAI said it was “concerned that the settlement does nothing to address non-price anticompetitive effects of the acquisitions, and that its attempt to remedy the likely anticompetitive price effects through a complex regulatory approach will be harmful to the public interest.”

The organization recommended that the Court adopt a process akin to that used under the federal Tunney Act, in which stakeholders could file public comments, the Attorney General would respond to the comments, and a hearing would be held to consider whether the settlement is in the public interest.

The AAI stated that it is well settled under antitrust law that the remedy for an unlawful merger should fully restore competition and the typical resolution of an anticompetitive merger is to require divestitures of other business units to replace the lost competition. Given the opportunity, AAI will seek to elaborate on its concerns by filing comments but cannot do so within the expedited framework proposed by the Attorney General. In light of the length and complexity of the proposed settlement, and the fact that the details only became public on June 24, the AAI requested that the hearing not address the merits of the settlement, but rather establish a procedure that allows consumers, third-party payers, competitors, and other stakeholders to have input in the process.

The American Antitrust Institute is a nonprofit education, research, and advocacy organization based in Washington, D.C. Its mission is to increase the role of competition, assure that competition works in the interests of consumers, and challenge abuses of concentrated economic power in the U.S. and world economy. The Institute promotes the vigorous use of antitrust as a vital component of national and international competition policy. Founded in 1998, the Institute’s contributors include foundations, law firms, corporations, associations, individuals, and public entities.

News: Antitrust