Antitrust lawyers said last week that the sudden scuttling of a deal to split up antitrust duties between the Federal Trade Commission and the U.S. Justice Department will have little effect on the way the agencies deal with hospital mergers.
The deal fell apart last week because of pressure from a senator who holds the purse strings for both agencies.Under the March 5 agreement that divided duties between the agencies, the FTC took over antitrust enforcement and clearance for hospital mergers and all healthcare-related matters except insurance, products and services, which remained with the Justice Department (March 4, p. 14). In all, 15 industries were affected by the agreement. Clearances that had taken up to several weeks were shortened to a few days because of the changes, an FTC spokeswoman said.
Now, the FTC and the Justice Department have returned to their prior official policy, in which both can investigate matters for all of the industries, say representatives for both agencies. In the past, the two have fairly evenly divided healthcare matters. But before the agreement went into effect, the Justice Department dispersed its 17-member healthcare task force to other departments and the FTC beefed up its healthcare team.
"Unless you have a clearly criminal case or a case outside the FTC's jurisdiction, you're unlikely to see Justice doing anything," said Michael Bissegger, a healthcare antitrust attorney with Epstein Becker & Green in Washington. "Whether or not there is a formal agreement to that effect, the agencies have made it clear in policy that is what they are going to do."
Still, the annulment has appeased Sen. Ernest Hollings (D-S.C.), who fought the agreement from the beginning, mostly because of concerns over larger media mergers.
"I think it's appropriate that they abandoned this agreement," Hollings said. "The FTC has broad discretion to protect consumers in merger reviews, whereas the Justice Department is looking for crime. The FTC protects the public interest."
Hollings, who is chairman of both the Senate committee that oversees the FTC and the Senate Appropriations subcommittee that oversees the Justice Department, had threatened to cut both agencies' budgets if they went forward with the agreement.
The Justice Department announced it had pulled out of the agreement on May 21, a day before an emergency spending bill for 2002 was introduced in the Senate. In an unreleased letter to Hollings, Assistant U.S. Attorney General Charles James, the Justice Department's antitrust division chief, said the agency assumed that by voiding the agreement, it would not suffer any funding consequences in the spending bill. The letter was read to Modern Healthcare by someone familiar with the matter who asked not to be named.
After the Justice Department withdrew from the agreement, Hollings did not pursue funding cuts for the agencies, said his spokesman Andy Davis. "He chose not to exercise those options," Davis said.
In a statement last week, James said the clearance agreement between the agencies had proved to be effective policy. "However, in view of the opposition expressed by Senator Hollings ... to the agreement and the prospect of budgetary consequences for the entire Justice Department if we stood by the agreement, the department will no longer be adhering to the agreement," he said.
The FTC would not comment on the nullification, stating only that it would return to handling cases as it did before March. However, the FTC's consideration of a "merger shop" (May 6, p. 12) that would investigate anticompetitive hospital mergers is not affected by the nullified agreement, said a spokeswoman.
The matter is far from over. Hollings, the FTC and the Justice Department will continue to discuss it, according to all parties. But providers should not believe that fewer healthcare cases will be investigated, as speculated within the industry, said Tom Campbell, an antitrust attorney with Gardner Carton & Douglas in Chicago.
"We're going to have to wait and see what they're going to do," Campbell said.