In the Federal Trade Commission’s (FTC’s) prosecution of the Phoebe Putney Health System Inc. merger, the U.S. Supreme Court will clarify the degree of specificity that state lawmakers must use in adopting an anticompetitive state regulation in order to secure an exemption from the federal antitrust laws.
The Eleventh Circuit upheld Phoebe Putney’s $195 million acquisition of its only nearby rival even though the merger produced a monopoly in the local market. The lower court held that the merger was exempt from the antitrust laws under the state action doctrine. That doctrine exempts state laws articulating a clear anticompetitive state policy so long as the conduct is actively supervised by state authorities. A 1941 Georgia law created a system of hospital authorities to manage the health care providers and it included the power to acquire other hospitals.
The Eleventh Circuit found that this state law expressed a clearly articulated anticompetitive policy because the state lawmakers must have realized that acquisitions in rural markets with few hospitals, which were authorized by the law, would harm competition. But the FTC has countered that the state law simply conveys a general set of corporate powers on the state authority, including the power to make acquisitions. Nothing in the law suggests approval of a merger-to-monopoly.
The Supreme Court last addressed the clear articulation prong of the state action test in the early 1980s. Then, it held that although a general grant of home rule authority to a city did not satisfy the doctrine, a specific grant to regulate the water supply did. In those cases, the Court held that an anticompetitive outcome must be reasonably foreseeable from the state legislature’s action.
In a second case, the U.S. Supreme Court agreed to decide whether its prior decisions require a trial court to address substantive class questions, particularly whether common or individual claims predominated, before certifying the class. The Court phrased the question presented as follows: “whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a classwide basis.”
In this case, a group of Philadelphia-area cable subscribers allege that Comcast Corp. unlawfully monopolized the local cable market.