RWJ / Saint Peter’s
The FTC voted 5-0 to issue an administrative complaint and to authorize a suit in federal court to enjoin the transaction.1 In its administrative complaint, the FTC alleges that RWJ’s proposed acquisition of Saint Peter’s will harm competition for GAC services in Middlesex County, New Jersey.2 The complaint alleges that Saint Peter’s University Hospital is less than a mile away from RWJ in New Brunswick, and that the transaction would combine the only two hospital providers in the city.
The FTC’s press release describes in strong terms that it has “overwhelming evidence that this acquisition would be bad for patients” and that the parties “routinely identify the other as the most significant competitor.” The FTC alleges that if the proposed merger is completed the parties would have a combined 50% share of the GAC market within Middlesex County.
Notably, the FTC’s complaint does not allege that the transaction will reduce competition in a market for labor. While the FTC did not allege harm to a labor market in its February 2022 complaint challenging the now-abandoned merger between Care New England and Lifespan,3 at that time the FTC was evenly split, with two Democrat Commissioners and two Republican Commissioners. In that case, Democratic FTC Chair Lina Khan and Commissioner Rebecca Kelly Slaughter released a separate Concurring Statement indicating that they would have supported an allegation that the transaction would lessen competition in a relevant labor market.4 With the Democrats now in control of the FTC following the confirmation of Democratic Commissioner Alvaro Bedoya last month, it is interesting that the FTC’s complaint in RWJ / Saint Peter’s focuses only on a market for GAC and does not include a labor market claim.
HCA Healthcare / Steward
The FTC voted 5-0 to issue an administrative complaint and to authorize a suit in federal court to enjoin HCA Healthcare’s proposed acquisition of Steward’s assets and facilities. In its press release announcing its challenge to the proposed merger, the FTC states5 that the parties are the second and fourth largest health systems in the “Wasatch Front Region,” and that “in some Utah markets, the reduction would be from three competitors to two, and in another, from four competitors to three.” The FTC’s complaint for a preliminary injunction alleges that three of the five hospitals HCA Healthcare proposes to acquire in this transaction are ones that it previously divested pursuant to an FTC consent order in 1995.6
Of note, the FTC’s challenge to the HCA Healthcare/Steward transaction appears to differ from its allegations in RWJ/Saint Peter’s in a few respects:
With respect to the latter point, although the FTC’s complaint alleges that the merging parties compete to recruit physicians, the FTC does not go further and define a separate relevant market for physician labor. Regardless, FTC leadership’s focus on labor issues underscores the importance of parties accounting for labor considerations when analyzing a proposed transaction – including not only potential harm to competition in a separate market for employees but also the extent to which employee recruitment or retention is an important dimension of competition between the merging parties.
The administrative trials are currently set for November 29, 2022 for RWJ/Saint Peter’s and December 13, 2022 for HCA Healthcare/Steward.
Authored by Jonathan Elsasser, Bob Leibenluft, and Ilana Kattan.
4 Federal Trade Commission, Concurring Statement of Commissioner Rebecca Kelly Slaughter and Chair Lina M. Khan Regarding FTC and State of Rhode Island v. Lifespan Corporation and Care New England Health System (17 February 2022) available at https://www.ftc.gov/system/files/ftc_gov/pdf/public_statement_of_commr_slaughter_chair_khan_re_lifespan-cne_redacted.pdf. In its decision to deny Lifespan’s and Care New England’s application under the Hospital Conversions Act, the Rhode Island Attorney General stated a concern that the transaction was likely to substantially reduce competition in the labor market for nurses. See Decision, State of Rhode Island Attorney General (17 February 2022) available at https://riag.ri.gov/press-releases/attorney-general-denies-application-merger-lifespan-and-care-new-england-health.
6 Complaint, Federal Trade Commission v. HCA Healthcare, Inc., Case No. 2:22-cv-00375-TC (D. Utah filed June 3, 2022).