Court Grants FTC’s Preliminary Injunction Request, Temporarily Blocking Hospital Merger

In Federal Trade Commission v. OSF Healthcare Systems et al., Northern District of Illinois Judge Frederick J. Kapala, granted the Federal Trade Commission’s move for a preliminary injunction, temporarily blocking a proposed merger of two Illinois hospitals.  The FTC filed suit to challenge a proposed merger between OSF Healthcare System and Rockford Health System, claiming that the deal violates Section 7 of the Clayton Act because it would result in the merged entity controlling a substantial share of the general acute care inpatient services market in the Rockford, Illinois area.  The hospitals challenged the FTC’s claims, arguing that the existence of another rival in the area would negate the anti-competitive effects by acting as a formidable competitor in the market.  In granting the preliminary injunction, the court held that the existence of one strong competitor following a merger does not necessarily reduce the probability that the proposed merger would substantially lessen competition in the future.   The court also held that the merger would give the combined entity significant bargaining leverage, which would in turn allow it to extract higher prices from insurance companies.

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