ProMedica Health Sys. v. FTC - 749 F.3d 559 (6th Cir. 2014)

Rule:

Section 7 of the Clayton Act prohibits mergers where in any line of commerce the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly. 15 U.S.C.S. § 18. As its language suggests, § 7 deals in probabilities, not certainties. 

Facts:

This is an antitrust case involving a proposed merger between two of the four hospital systems in Lucas County, Ohio. The parties to the merger were ProMedica, by far the county's dominant hospital provider, and St. Luke's, an independent community hospital. The two merged in August 2010, leaving ProMedica with a market share above 50% in one relevant product market (for so-called primary and secondary services) and above 80% in another (for obstetrical services). Five months later, the Federal Trade Commission challenged the merger under § 7 of the Clayton Act, 15 U.S.C. § 18. After extensive hearings, an Administrative Law Judge and later the Commission found that the merger would adversely affect competition in violation of § 7. The Commission therefore ordered ProMedica to divest St. Luke's. ProMedica now petitions for review of the Commission's order, arguing that the Commission was wrong on both the law and the facts in its analysis of the merger's competitive effects.

Issue:

Did the Commission err in its finding that the merger would adversely affect competition in violation of § 7 of the Clayton Act?

Answer:

No

Conclusion:

The Court held that the Commission's ruling that the merger of two particular hospitals would adversely affect competition in violation of § 7 of the Clayton Act, 15 U.S.C.S. § 18, was supported by substantial evidence because it properly considered the relevant product market as primary and secondary medical services, excluding obstetrics, since the competitive conditions were similar enough to justify clustering those markets, although the competitive conditions differed for obstetric services. Market concentration data, particularly the Herfindahl-Hirschman Index, established a presumption of anticompetitive harm as these numbers were multiples of the numbers necessary for such a presumption. The hospitals did not rebut the presumption that the merger would reduce competition. Divesture was the best means to preserve competition in the relevant markets.