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• W803226501 abstract "I. INTRODUCTION Since the early 1980s, for-profit and nonprofit hospitals have undergone an unprecedented number of mergers,1 reflecting the dramatic changes in the health care industry.2 The Federal Trade Commission (FTC) and Department of Justice (DOJ) have challenged mergers of both types of hospitals.3 Recently, however, a handful of nonprofit hospitals have offered nonprofit status as a defense to federal challenges to nonprofit hospital mergers.4 Although a complete defense-nonprofit status alone does remove the entity from antitrust scrutiny-a limited defense has evolved as nonprofit hospitals claim that a nonprofit merger is less likely to have anticompetitive effects than an equivalent for-profit merger.5 Under Section 7 of the Clayton Act, the FTC and DOJ review proposed mergers to determine whether the merger will have any significant anti-competitive effects.6 Congressional policy underlying these statutes seeks to protect consumer welfare by preserving competition in the market.7 Consumers benefit from competition because it encourages producers to offer the best quality at the lowest price.8 Although the Supreme Court has established that the nonprofit sector is subject to the antitrust laws9 and numerous appellate courts have held that nonprofit status alone cannot rebut a presumption of illegality,10 courts are split on the extent to which nonprofit status can be considered in predicting the competitive effects of a merger. Four district courts have recently determined that nonprofit status deserves consideration when evaluating whether a proposed merger will lessen competition.11 In contrast, other courts, including the Seventh and Eleventh Circuits, have rejected the view that nonprofits are less likely to act anti-competively and have refused to treat nonprofits differently when determining the potential merger's anticompetitive effects.12 Federal Trade Commission v. Butterworth Health Corp., which involved the proposed merger of two nonprofit hospitals in Grand Rapids, Michigan, dramatically increased the significance of nonprofit status to antitrust analysis.13 Although the district court agreed that the FTC had shown that the proposed merger would result in a significant concentration of power in the relevant markets and give the merged entity an undue percentage share of those markets,14 the Butterworth court allowed the merger to proceed.15 Previous courts have given some weight to nonprofit status, but the district court decision in Butterworth marks the first time a court has embraced the notion that nonprofit hospitals act differently in the marketplace and therefore require different treatment under the antitrust laws.16 The FTC appealed the district court decision to the Sixth Circuit which issued a per curiam opinion holding that the district court decision was not legally erroneous.17 Although the circuit court only summarized the district court's opinion and provided little of its own analysis, it did challenge the district court's reliance on nonprofit status in determining that the merger would have anticompetitive effects.18 This affirmance by the circuit court marks the first time an appellate court has permitted consideration of nonprofit status.Is This Note uses the Butterworth case to consider how nonprofits should be treated in determining whether a merger is likely to have anti-competitive effects. It challenges the factors recognized by the Butterworth court, examines the arguments regarding whether nonprofits behave differently than for-profits, and analyzes whether nonprofits should enjoy different treatment under the antitrust laws. The Note suggests that the market behavior of nonprofit hospitals is materially similar to that of for-profits, and that, therefore, a less stringent application of the antitrust laws is justified. Part II discusses the organizational differences between the nonprofit and for-profit sector generally and then surveys the empirical studies on the behavior of nonprofit and for-profit hospitals. …" @default.
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• W803226501 date "1999-03-01" @default.
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• W803226501 title "The Use of the Nonprofit Defense Under Section 7 of the Clayton Act" @default.
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