Mergers & Acquisitions Archives - Page 24 of 48

Mergers & Acquisitions

Antitrust and Healthcare: A Comprehensive Guide

by Emily Townsend | Jul 9, 2013 | Healthcare Antitrust, Mergers & Acquisitions, Monopolization/Abuse of Dominance

McDermott Will & Emery is pleased to announce the publication of Antitrust and Healthcare: A Comprehensive Guide, First Edition. This new publication, produced by American Health Lawyers Association provides invaluable “practice pointers” to help healthcare industry participants, and their counsel, minimize antitrust risk and more successfully plan and execute business and litigation strategies. McDermott partner, David Marx, Jr., co-authored this first edition with Christine L. White and Saralisa C. Brau of the Federal Trade Commission. The authors draw on their significant government enforcement and private-sector counseling and litigation experience to explain the application of antitrust principles to the different segments of the healthcare industry and the specific issues they confront. Health care lawyers and antitrust practitioners will find this new guide a complete resource for representing all types of organizations including healthcare providers; commercial insurance companies and managed care organizations; for-profit, not-for-profit, and government-owned or controlled concerns; self-insured employers; and professional partnerships. Sections covered include:

Antitrust Overview
Mergers, Acquisitions, and Issues of Legality
Premerger Notification and Transaction Planning
Joint Ventures
Provider Networks and Managed Care Contracting
Trade Associations and Group Purchasing Organizations
Medical Staff Privileges, Exclusive Physician Contracts, and Peer Review
Monopolization
The Robinson-Patman Act
Exemptions and Immunities

The full table of contents can be viewed here. To purchase the book, click here.

American Airlines, US Airways Merger Faces Additional Challenges

by Emily Townsend | Jul 8, 2013 | Mergers & Acquisitions

by Megan Morley

Last week, the proposed merger of American Airlines and US Airways faced additional scrutiny when nineteen states joined the U.S. Department of Justice’s investigation of the pending transaction. Greg Abbott, Texas Attorney General, is leading the effort on behalf of a group of attorneys general from states including New York, California and Florida. This move by the states comes after the Government Accountability Office released a report last month that concluded the merger would reduce competition by eliminating an effective competitor in 1,665 routes.

Additionally, 40 consumers filed a suit against the airlines in the Northern District of California this week seeking to stop the merger. Ford, et al. v. US Airways Group, et al., case number 13-cv-3041. The complaint alleges that the deal would lead to anticompetitive effects that harm consumers, such as additional charges for amenities normally included in the ticket price, a decline in the quality of service, and the reduction of the number of flights. It also notes previous consolidations in the airline industry, including the Delta Air Lines and Northwestern Airlines merger in 2008, and claims these prior transactions caused similar anticompetitive effects. Plaintiffs argue that the combination would create the largest airline in the world and that the airline would control almost 25 percent of the U.S. market. US Airways called the suit “without merit” and believes that the deal will be successfully concluded in the third quarter.

This private action brought against the airlines serves as a reminder that any merger under review by a government agency, especially high-profile deals, faces potential follow-on civil suits. Companies contemplating a transaction should understand this risk and should be prepared to respond quickly against the allegations to successfully defend the merger.

$720,000 Civil Penalty for Failure to File HSR

by Emily Townsend | Jun 21, 2013 | DOJ Developments, FTC Developments, Mergers & Acquisitions

by Carla A. R. Hine

Today the Department of Justice (DOJ), on behalf of the Federal Trade Commission (FTC), announced a settlement with MacAndrews & Forbes for failing to file Hart-Scott-Rodino (HSR) in connection with the acquisition of voting securities of Scientific Games (SG). MacAndrews & Forbes, which is a wholly-owned holding company of Ronald Perelman, will pay $720,000 for failing to file HSR.

MacAndrews & Forbes had filed HSR and observed the waiting period for a prior acquisition of SG voting securities. Under the HSR Rules, a buyer that has filed HSR and observed the waiting period can continue to acquire voting securities of an issuer valued up to the next notification threshold for a period of five years following expiration of the HSR waiting period. (The relevant notification thresholds in acquisitions of less than 50 percent of the voting securities are $50 million, $100 million and $500 million, each of which are adjusted annually.) However, if the buyer will pass the next notification threshold, or acquire additional stock after the five year period expires, a new HSR filing is required. The HSR size-of-transaction is determined by valuing what a buyer will hold as a result of the transaction. In other words, the buyer needs to look at the value of the voting securities of an issuer it currently holds aggregated with the value of the stock it will acquire. The value of publicly traded stock, such as SG’s, is determined by looking at the lowest closing quotation price in the preceding 45 calendar days. As such, if a stock goes up in value over time, even acquisitions of small tranches of shares can put an acquiring person above a notification threshold.

That is what happened in MacAndrews & Forbes’s case. It had filed HSR in February 2007 and the five year period in which it could make additional acquisitions expired when it acquired an additional 800,000 shares, valued at $6.5 million, in June 2012. This acquisition, when aggregated with the value of SG stock MacAndrews & Forbes already held, exceeded the filing threshold. MacAndrews & Forbes realized the inadvertent failure to file, and submitted a corrective filing in September 2012. The takeaways here are to remember that HSR thresholds consider both what a buyer already holds in addition to what else it will acquire, and that subsequent potential HSR obligations need to be monitored over time.

To view the press release, click here.

To view the complaint, click here.

ACOs and Antitrust Are Aligned and Compatible, Says Commissioner Brill

by Emily Townsend | Jun 13, 2013 | FTC Developments, Healthcare Antitrust, Joint Ventures/Competitor Collaboration, Mergers & Acquisitions

by Carrie G. Amezcua

FTC Commissioner Julie Brill addressed attendees at the 2013 National Summit on Provider Market Power on June 11. The focus of her remarks were on the intersection of antitrust, the Affordable Care Act (ACA) and Accountable Care Organizations (ACOs). She first touched on the ACA. Noting the empirical evidence shows that high concentration among health care providers has harmful competitive effects, she was optimistic that the exchanges that will be established as a result of the ACA will offer consumers a range of competing, affordable health care products and will encourage greater competition in local insurance markets.

Turning to ACOs and antitrust, she stated that the FTC is starting to hear providers contend that the ACO program is a justification for their (alleged) anticompetitive activity. Providers complain that the government is "talking out of both sides of their mouth" with Centers for Medicare & Medicaid Services (CMS) encouraging coordination via the ACO program and the antitrust agencies challenging coordination. Commissioner Brill disagreed stating that "the goals of the ACA and antitrust enforcement are aligned and compatible." She noted the extensive cooperation between CMS and the antitrust agencies. She explained that the ACA requires coordination of care but that it "neither requires nor encourages to merger or otherwise consolidate," but like any collaboration short of a merger, they must do so in a way that does not violate antitrust laws. Commissioner Brill also stated that ACOs are flourishing and only two provider groups have thus far sought antitrust guidance as permitted under the ACO Policy Statement from the agencies before forming the ACOs.

Finally, Commissioner Brill emphasized that the FTC will continue to investigate provider collaborations or mergers where there may be competitive harm. She made a point to clarify that the FTC evaluates all assertions of efficiencies and quality improvements but that parties must provide "good documentary evidence" to support these assertions.

Commissioner Brill’s speech is consistent with the posture and approach the agencies have been taking with regard to provider consolidations in the relatively new landscape being built by the ACA and formation of ACOs. There is not yet enough data to see exactly how the ACA will affect providers from an antitrust perspective. But providers can be certain that the agencies will continue to look closely at any consolidation or collaboration that may violate the antitrust laws, regardless of whether the activity was taken to try to comply with the ACA.

The full speech can be found here.

District Court Grants Temporary Restraining Order in Phoebe Putney Litigation

by Emily Townsend | May 17, 2013 | FTC Developments, Healthcare Antitrust, Mergers & Acquisitions

by Carrie Amezcua

The next step of the on-going Phoebe Putney litigation is completed. On Wednesday, April 15, the district court for the Middle District of Georgia granted the Federal Trade Commission’s (FTC) motion for a Temporary Restraining Order (TRO) in Federal Trade Commission v. Phoebe Putney Health System, Inc., No. 1:11-cv-58 (M.D. Ga.). In its order, the court stated that the FTC "carried its burden of persuasion to establish the need for the imposition of the ‘extraordinary and drastic remedy’ of a TRO pending the outcome of the court’s decision on the [Preliminary Injunction] Motion." The TRO prohibits Phoebe Putney Memorial Inc. from taking further steps to consolidate with Palmyra Park Hospital. Further, the court stated "In response to Plaintiff’s request that the Court order Defendants to refrain from instituting any price changes, the Court ordered that Defendants are prohibited from making any price changes to existing contracts; however, said prohibition does not extend to the formation of any new contracts." Richard A. Feinstein, Director of the FTC’s Bureau of Competition issued a brief statement on the district court’s ruling saying "We are pleased that the Court has issued a Temporary Restraining Order prohibiting any further steps to consolidate the two hospitals in Albany, and prohibiting any price changes to existing health-plan contracts, pending our Motion for Preliminary Injunction."

The district court had granted a TRO the FTC filed in 2011 to stop the acquisition, but dissolved that TRO upon the district court’s finding that the transaction was exempt under the state action immunity doctrine. The 11th Circuit affirmed, but in February of this year, the Supreme Court reversed holding that Georgia’s enabling statute did not clearly articulate an affirmatively expressed policy for displacing competition.

The district court’s grant of the TRO is another victory for the FTC in this long litigation. Now that the Supreme Court ruled the transaction is not exempt from the antitrust laws, the hospitals will have to defend what the FTC calls a merger to monopoly. The TRO will stay in place until a hearing on the motion for Preliminary Injunction, which is scheduled for June 14, 2013. The FTC has a successful track record in getting preliminary injunctions granted in hospital mergers, so it would not be surprising if the district court also granted the Motion for Preliminary Injunction. This case is further evidence of the high priority the FTC places on challenging health care mergers it views as anticompetitive and shows the FTC is willing to commit resources over an extended period of time to challenge such mergers.

The administrative hearing is scheduled to begin July 15, 2013. More information on the district court and adjudicative proceedings can be found at https://www.ftc.gov/os/caselist/1110067/index.shtm and https://www.ftc.gov/os/adjpro/d9348/index.shtm.

FTC Issues Fiscal Year 2012 HSR Report

by McDermott Will & Emery | May 6, 2013 | DOJ Developments, FTC Developments, Mergers & Acquisitions

by Carla A. R. Hine

Earlier this week, the Federal Trade Commission (FTC) issued its Hart-Scott-Rodino (HSR) report for fiscal year 2012 (FY2012), which summarizes enforcement actions and key statistics regarding number of filings, second requests and challenges. The press release and a link to the report can be found here.

Filings were relatively flat from 2011 to 2012. There were fewer second requests and there wasn’t a remarkable difference in the overall percentage of filings resulting in second requests (3.9 percent in 2011; 3.5 percent in 2012). In 2012, the FTC issued more second requests than the U.S. Department of Justice (DOJ). However, when looking at the number of second requests each agency issued as a percentage of the filings each agency was "cleared" to investigate, the FTC only issued second requests in 14.8 percent of the filings it was cleared to investigate, whereas the DOJ issued second requests in 40.8 percent of filings the agency was cleared to investigate. Overall, it is hard to read too much into these statistics other than reportable transactions remain steady and there do not seem to be any wild swings in enforcement trends.

The report also notes that of 60 corrective filings (i.e., filings where the parties closed the transaction and later realized they should have filed), two resulted in enforcement actions with civil penalties ($500,000 and $850,000).

FTC’s New Chairwoman Ramirez Says Health Care Continues To Be Top Priority

by Emily Townsend | Apr 26, 2013 | FTC Developments, Healthcare Antitrust, IP Antitrust, Mergers & Acquisitions

by Hillary Webber

In remarks made this week at the International Competition Network annual conference, Federal Trade Commission (FTC) Chairwoman Edith Ramirez stated that health care will continue to be a top priority for the FTC. Referring to health care and hospital mergers in particular, she said that the Commission will "guard[] against what we consider to be consolidation that may end up having adverse consequences for consumers." The Chairwoman’s comments indicate that the recent leadership change at the FTC from former Chairman Jon Leibowitz to Chairwoman Ramirez has not altered the Commission’s priorities.

Recent months have seen a flurry of FTC activity in the courts related to health care. For example, two FTC cases came before the U.S. Supreme Court this term — the FTC’s challenge to Phoebe Putney’s acquisition of Palmyra Park Hospital in Georgia and the FTC’s challenge to "pay-for-delay" patent infringement litigation settlements between branded and generic pharmaceutical manufacturers.

In February, the Supreme Court ruled that the state action doctrine did not immunize Phoebe Putney’s hospital transaction from federal antitrust scrutiny, and the FTC has subsequently filed renewed motions in federal district court to stop further integration of the two hospitals even as it prepares for a full administrative hearing on the merits that will begin in August.

A decision on the "pay-for-delay" case is expected in June. The Supreme Court’s ruling may have a large impact on further FTC efforts against what it perceives as anticompetitive efforts to delay generic drug entry.

Health care clients considering acquisitions are advised to consult antitrust counsel early in the transaction process. Given the FTC and DOJ’s close scrutiny of health care transactions, early advocacy before the antitrust agencies is often critical to a deal closing on schedule.

China’s Merger Control Rules Changing: MOFCOM Publishes New Draft Regulations on Remedies and Simple Cases

by Emily Townsend | Apr 17, 2013 | Chinese Developments, Joint Ventures/Competitor Collaboration, Mergers & Acquisitions

by Henry Chen, Frank Schoneveld and Alex An

China’s Ministry of Commerce recently issued two new draft regulations. The first provides a wider range of potential remedies to obtain the clearance of a concentration (e.g., a merger, acquisition, joint venture, etc.); the other defines the standards for “simple” merger cases that are eligible for a “fast-track” clearance procedure.

To read the full article, click here.

German Federal Cartel Office Levies Administrative Fine Due to Incomplete Merger Notification

by Emily Townsend | Jan 24, 2013 | Cartel Enforcement, German Developments, Mergers & Acquisitions

by Martina Maier, Philipp Werner and Robert Bäuerle

The German Federal Cartel Office (FCO) has imposed an administrative fine for the submission of incomplete information in a merger notification. The missing information concerned details about shareholdings essential for the competitive assessment analysis. The shareholdings belong to a private individual who controlled the notifying party. Companies and their shareholders required to submit notifications should be aware that the omission of information in merger notifications before the FCO can result in fines not only for the notifying company but also for the company(ies) and individual(s) controlling it.

To read the full article, click here.