SCOTUS Grants Certiorari in Phoebe Putney

Josh Wright —  25 June 2012

From Bloomberg:

The U.S. Supreme Court said it will decide whether states can block antitrust scrutiny of hospital mergers such as Phoebe Putney Health System Inc.’s acquisition of Palmyra Park Hospital in Georgia.

The justices today said they will hear the Federal Trade Commission’s appeal of a U.S. appellate court ruling that the proposed purchase of HCA Inc.-owned Palmyra, based in Albany, Georgia, could be carried out over the agency’s objections.

The Atlanta-based 11th U.S. Circuit Court of Appeals said the Georgia state legislature granted antitrust immunity to the deal, trumping the FTC’s assertion that the acquisition would result in too few health-care options for Albany residents.

“We are pleased that the Supreme Court will consider the Phoebe Putney matter in the coming term,” FTC Chairman Jon Leibowitz said in an e-mailed statement. “This case is important to consumers, who benefit from a competitive health care marketplace. It also may provide crucial guidance on the boundaries of the state action doctrine.”

The State Action doctrine has long been in some need of guidance; see the FTC State Action Report or the Antitrust Modernization Commission Report – both which call for increased guidance and clarity on the contours of the state action doctrine – for details.  As the AMC Report observes:

The lower courts have not always properly implemented Supreme Court precedents outlining what is required to satisfy the clear articulation prong. In Town of Hallie v. City of Eau Claire the Supreme Court held the clear articulation standard was satisfied where the allegedly anticompetitive conduct was a “foreseeable result” of a state law.52 Following Town of Hallie, however, some courts have applied a standard of “foreseeability” (and thus immunity) wherever a state authorizes conduct that does not necessarily, but might, have an anticompetitive effect. 53  To say that anticompetitive effects are a possible result of a statute, however, is not the same as finding “a deliberate and intended state policy” to replace competition with regulation, as the Court subsequently required in FTC v. Ticor Title Insurance Co.54

There are a number of areas within the state action doctrine that could use some attention.  I’m sure we’ll have more discussion of the case here in the weeks to come.

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  1. U.S. Supreme Court to Review “State Action” Doctrine in FTC Merger Challenge | Focus on Regulation - July 5, 2012

    […] to facilitate anticompetitive conduct and unlawful mergers that would ultimately harm consumers. Commentators have long called for more clarity on the scope of the doctrine. The Supreme Court may use this case […]