DoJ's new policy alleviates hospital merger woes

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As more hospitals are merging and consolidating with other hospitals to deflect reimbursement cuts and costly overheads, the Department of Justice (DoJ) has updated its Antitrust Division’s Policy Guide to Merger Remedies to help ease this complex process and help add transparency to the system.

The goal of the updated policy guide is to “provide an effective remedy to eliminate the anticompetitive effects of a proposed transaction,” the DoJ said.

The agency added that the guidelines update the 2004 version and were necessary due to the changing healthcare landscape that has moved toward complex merger agreements. While most mergers are beneficial, the agency said that some “lessen competition and harm consumers by resulting in a firm’s acquisition of market power or increasing the likelihood of anticompetitive coordination.”

The new policy aims to uphold the Antitrust Division’s objective: preserve competition. “A remedy carefully tailored to the competitive harm is the best way to ensure effective relief,” the DoJ said. Additionally, the agency noted that structural relief is the most viable option to preserve competition; however, in some circumstances it may be appropriate to combine both conduct and structural relief.

The agency said that during these types of agreements it is necessary to determine what competitive harm the merger may cause and how the relief will remedy the potential harms.

The policy outlines the various types of mergers—horizontal or vertical—and effective merger remedies that include both structural and conduct provisions. While structural remedies may involve the sale of physical assets by merging firms, structural remedies are simple and preserve competition.

“In every case, the Antitrust Division focuses on the specific facts of the proposed transaction. We are prepared to clear a merger, block a merger or accept a remedy that maintains efficiencies as long as the result eliminates any competitive harm," said Assistant Attorney General Christine Varney of the DoJ’s antitrust division. "In the current environment of increasing transnational mergers and complex vertical transactions, the Antitrust Division must be ever nimble in its efforts to ensure that any remedies effectively preserve competition, promote innovation and protect consumers."

The DoJ said merger remedies should work to preserve competition rather than protect individual competitors. In addition, DoJ offered that “effectively preserving competition is the key to an appropriate merger remedy.”

A copy of the updated policy can be viewed here.