On February 19, the U.S. Supreme Court issued a major antitrust decision limiting antitrust immunity for state-sanctioned conduct. The court unanimously overturned the U.S. Court of Appeals for the Eleventh Circuit’s ruling allowing Phoebe Putney Health System Inc. to acquire its only competitor. The Eleventh Circuit had previously stated the acquisition was permissible under the state-action doctrine. In its opinion, the Supreme Court ruled that the granting of mere general corporate powers to government entities under state law does not offer blanket protection from the antitrust laws. The Supreme Court emphasized that immunity from the antitrust laws is “disfavored” unless a state intended to displace competition. In so ruling, the Supreme Court has further limited the ability of health care and other entities to rely upon the state-action immunity doctrine to avoid antitrust entanglement.
In April 2011, the Hospital Authority of Albany-Dougherty County in Georgia, which owned and operated Phoebe Putney Memorial Hospital, approved a plan to acquire Palmyra Park Hospital, which was Phoebe Putney Memorial Hospital Inc.’s only competitor in a six-county geographic market. The two hospitals accounted for more than 85 percent of the acute care in that geographic market, which normally would have raised significant antitrust concerns. Indeed, the Supreme Court appeared to indicate as much in stating, “While subsequent acquisitions by authorities have the potential to reduce competition, they will raise federal antitrust concerns only in markets that are large enough to support more than one hospital but sufficiently small that the merger of competitors would lead to a significant increase in market concentration. This is too slender a reed to support the Court of Appeals’ and respondents’ inference.”
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