Ninth Circuit Affirms District Court Order to Unwind Hospital Merger

13 February 2015
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Key takeaways

  • This week, the U.S. Court of Appeals for the Ninth Circuit upheld a district court’s ruling that ordered a healthcare system to unwind its consummated acquisition of a physician practice group due to the likelihood that the transaction would have anticompetitive effects.
  • The Court held that even if the merger might result in better service and outcomes for patients, the antitrust laws do not permit mergers that lessen competition and are likely to result in higher prices simply because the merged entity can improve its operations.
  • This case also highlights a recent trend of post-merger enforcement actions challenging transactions that were not subject to pre-merger government review. Parties are cautioned to consider the potential competitive implications of every transaction prior to its consummation. In addition, pre-merger communications suggesting that higher prices or other anticompetitive effects are a goal or likely effect of a transaction are red flags in the subsequent review of any transaction.