Court tightens scope of antitrust immunity in government-owned hospital mergers

In a unanimous decision for the Federal Trade Commission (FTC), the Supreme Court found that the state action immunity doctrine does not shield Phoebe Putney Health System’s acquisition of Palmyra Park Hospital from antitrust scrutiny, sending the parties back to FTC administrative litigation to battle over the legality of the hospital merger. The court overturned the Eleventh Circuit’s decision allowing Phoebe Putney to acquire the only other nearby hospital in Albany, Georgia, for $195m. The Supreme Court clarified the specificity required of state legislation to invoke state action immunity and, in turn, narrowed the scope of antitrust immunity potentially available to parties contemplating a transaction with a government-owned entity.

In 2011, Phoebe Putney Health System, owned by a local hospital authority, acquired Palmyra Park Hospital, in a transaction the FTC asserted created a virtual monopoly and would severely lessen competition for hospital services in the local area. The parties argued, and a Georgia district court and the Eleventh Circuit agreed, that even if the transaction created a monopoly, it was immune from antitrust scrutiny under the state action doctrine because the acquisition and the subsequent operation of the hospital were authorized pursuant to a state legislative policy to displace competition…

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