Getting Market Definition Right: Hospital Merger Cases And Beyond

By Martin Gaynor & Kevin E. Pflum – 

In 2016 the Federal Trade Commission (“FTC”) lost motions for preliminary injunction in two separate hospital mergers. In both cases the district courts rejected the FTC’s geographic market definition based on flawed interpretations of the “hypothetical monopolist” test. Fortunately the appeals courts correctly identified the district courts’ errors and reversed their decisions. In this article, we review the process used by the FTC and the Antitrust Division of the Department of Justice to define markets and discuss how this process applies to the markets for hospital services specifically. We summarize the courts’ opinions in these two hospital merger cases and discuss the ways in which the district courts erred in their analyses and how the appeals courts’ decisions will affect future merger cases.