Friday, January 17, 2014

Hospital Corporation of America v. FTC case brief summary

Hospital Corporation of America v. FTC case brief summary
807 F.2d 1381 (1986)

In this case, Posner analyzed the acquisition of several hospitals in Chattanooga that increased their market share from 14% to 26% (with the four largest firms holding 91% of the market share) and concluded that the Federal Trade Commission (FTC) was justified in finding probable anti-competitive effects.

  • In the years following this decision, the FTC actually failed to stop a great many hospital mergers in court (it was found that patients will travel a great distance to get the services they require from hospitals).
  • Posner dismisses the idea of competitor complaints, since mergers facilitating collusion actually help competitors; excessive protests might indicate that the merger is actually competitive and lead the FTC to allow the merger to pass.
  • This opinion is good for explaining why any merger makes collusive coordinated effects more likely, however, it does not specify any particular reason why Hospital Corp. should not merge.

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