3rd Circuit Rules FTC Can Temporarily Block NJ Hospital Merger

The Federal Trade Commission (FTC) offered more than enough evidence to temporarily block New Jersey’s largest hospital system from buying a smaller competitor, a federal appeals court ruled. 

The 3rd US Circuit Court of Appeals affirmed a lower-court order that enjoined Hackensack Meridian Health and Englewood Healthcare Foundation from completing their $439 million merger, announced in 2019, while the agency’s administrative complaint is pending.

Since Hackensack Meridian already owns two of Bergen County, NJ’s six hospitals, purchasing Englewood would give it a 47 percent market share and allow it to raise prices by an estimated $31 million, the FTC estimated.

US District Judge John Michael Vazquez in Newark ruled last August that the FTC was likely to prevail on its claim that the merger would violate the Clayton Act, a federal antitrust law that bars acquisitions that may “substantially…lessen competition” or “tend to create a monopoly.”

Vazquez’s ruling was supported on appeal by attorneys general of about two dozen states, who argued that consolidation in the healthcare industry has affected both prices and the quality of patient care.

However, the hospitals and several healthcare associations, in amicus briefs, argued that Vazquez failed to consider all the benefits the merger would bring, and the fact that the New Jersey Health Department and New Jersey Attorney General’s office had approved the deal.

“Some procompetitive benefits may exist, but they are not significant enough to offset the likely anticompetitive effects of the merger,” Senior Circuit Judge D. Michael Fisher wrote for the panel.

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