On January 24, 2014, in the matter Federal Trade Commission v. St. Luke’s Health System, Ltd., Judge B. Lynn Winmill, of the US District Court in the District of Idaho, ordered divestiture of the affiliation between St. Luke’s Health System (St. Luke’s) and Saltzer Medical Group (Saltzer).
In October 2012, McKesson Corporation (McKesson), a healthcare services and information technology company, announced an agreement to purchase PSS World Medical Inc., a distributor of medical products and services, in a transaction valued at $2.1 billion.
Mergers and monopolization
Our professionals have extensive experience examining mergers and acquisitions in the healthcare and life sciences industries. We regularly provide antitrust analysis and testimony on matters involving payors, providers, and manufacturers. Our experts consult on issues such as market definition, hospital market power, pharmaceuticals and medical devices markets, and pricing. We have quantified the competitive effects of hospital, health plan, pharmaceutical, and physician group mergers.
- Conducted detailed economic analysis on behalf of Eli Lilly in connection with its $5.4 billion acquisition of Novartis Animal Health. Both firms were active in developing and marketing animal health products, including medications used to treat pets and livestock. Bates White assessed overlaps in several areas, and presented results of its analysis to the FTC. The FTC approved the merger after an eight month investigation, with divestiture required in one product area, canine parasiticides.
- In Federal Trade Commission v. St. Luke’s Health System, Ltd., supported the expert work of Professor David Dranove on behalf of the FTC and the State of Idaho. The agency, along with Idaho Attorney General and rival hospitals, challenged the acquisition of Saltzer Medical Group by St. Luke’s Health System. Provided economic analysis support on issues of market definition, competitive effects, and efficiencies. Judge B. Lynn Winmill, of the US District Court in the District of Idaho, ordered St. Luke’s to divest Saltzer Medical Group. See the press release.
- Provided detailed analysis on behalf of McKesson Corporation in connection with its $2.1 billion acquisition of PSS World Medical Inc. The analysis, which was presented to the FTC, showed that the proposed merger of the two medical and surgical supplies distributors was unlikely to lead to any anticompetitive effects. After McKesson pulled and re-filed its HSR filing, the FTC granted early termination of the waiting period and approved the merger without issuing a second request for additional information to the parties. See the press release.
- Conducted extensive economic analysis on behalf of Express Scripts in connection with its $29 billion acquisition of Medco Health Solutions. The analysis, which was presented to the FTC as well as state enforcement agencies, showed that adverse competitive effects were unlikely in any relevant market. Bid data were used to investigate the current structure of competition and to calibrate merger simulation models, which demonstrated there would be no unilateral incentive to increase price after accounting for anticipated efficiencies. The analysis addressed possible coordinated effects and monopsony concerns. The FTC unconditionally approved the merger after an eight-month investigation and found no likelihood of unilateral effects, coordinated effects, or exercise of monopsony power. See the case study.
- In In the Matter of OSF Healthcare System, a corporation, and Rockford Health System, retained as a testifying expert on behalf of the FTC to analyze the competitive effects of OSF Healthcare System’s proposed acquisition of Rockford Health System in Rockford, Illinois. Provided written, deposition, and hearing testimony. After US District Judge Frederick Kapala found the FTC had demonstrated a likelihood of success on the merits and granted the FTC’s request for a preliminary injunction, the parties abandoned the merger. See the press release.
- Provided analysis on behalf of Grifols in connection with its acquisition of Talecris—two companies involved in the manufacture and sale of biologic therapies derived from human plasma. Evaluated possible concerns of coordinated effects related to the merger and assessed the merger-specificity of claimed efficiencies in an analysis presented to the FTC. The FTC approved the acquisition subject to a consent decree that facilitated entry. See the case study.
Served as consulting expert on behalf of a device manufacturer raising competitive concerns related to bundling at the FTC and other potentially interested competition authorities.
Served as a consulting expert on behalf of an interested party to the merger of ViroPharma and Shire. Participated in and helped prepare corporate executives for meeting with the FTC.
Provided economic analysis of the likely competitive effects of UnitedHealth Group’s proposed acquisition of XL Health, an innovative provider of Medicare Advantage plans that focus on better coordinating care for seniors with chronic conditions. Assisted counsel for UnitedHealth and XL Health in preparing analyses that highlighted the limited direct competition between the two health insurers and the broad scope for post-merger efficiencies. The arguments were presented to DOJ, which allowed the transaction to close without a second request.
Assisted Vermont-based Fletcher Allen Partners (FAP) in securing FTC clearance for FAP’s proposed affiliation with New York-based Community Providers, Inc. (CPI). Performed analyses that demonstrated a high degree of complementarity between FAP’s and CPI’s service offerings and minimal head-to-head competition. After presentation using our analyses, the FTC permitted the waiting period to expire without further investigation.
In United States and State of Texas v. United Regional Health Care System, retained as testifying expert on behalf of DOJ to analyze the competitive effects of United Regional’s exclusionary contracts with health insurers. DOJ reached a settlement with United Regional that prohibits the hospital from entering into contracts that improperly inhibit commercial health insurers from contracting with United Regional’s competitors.
- International Handbook of Antitrust Economics, Vol. 1, 2014