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In local Massachusetts news, a state Superior Court judge refused to approve a consent agreement permitting PartnersHealthcare to close its merger with three smaller hospitals. The transactions had been opposed by the MA Attorney General on grounds that they stifled competition in the healthcare markets in the affected communities. Partners and the AG had reached an agreement to permit the transactions to close under certain conditions. These conditions included a series of regulations on pricing, price caps, and other conduct-based regulations over a ten year period as well as oversight by the Superior Court. When presented with the consent agreement, the court balked. The court refused to approve the agreement for two reasons:
1. The court believed the merger was not in "public interest" as defined by the case law. In the view of the court, the proposed consent agreement did not adequately address the harm alleged by the AG in her complaint, namely that transaction would limit competition in this sector.
2. The court through up its hands when it came to implementation of the consent agreement. The court noted that the agreement was not self-enforcing and that implementation as well as oversight would be complicated. For its part, the court admitted that it was "ill-equipped" to stay abreast of the many rapid changes in the healthcare industry such that the court would be able to adequately oversee implementation of the agreement.
Result, the court refused to sign on. Partners and the AG are left to decide how to move forward, with the AG threatening to take up litigation again in the event Partners decides to close the transaction without its approval.
What's interesting here is that this is an example of a local AG moving to enforce state level anti-competition/antitrust laws in the context of a transaction that has either cleared HSR or was too small to require an HSR filing. It's a reminder that even for small deals, antitrust counsel have important roles early on in the transaction planning process.
Visit the M&A Law Prof Blog, hosted by Brian JM Quinn, for blogs on legal developments in corporate governance and mergers & acquisitions.
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