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Supreme Court Limits State-Action Immunity in Hospital Merger

On February 19, 2013, the Supreme Court visited a corner of the antitrust map that it last glimpsed during the Reagan Administration—the state action doctrine. The case that prompted this sojourn, FTC v. Phoebe Putney Health System, Inc., arose when a hospital authority in Albany-Dougherty County, Georgia attempted to acquire the only other hospital that provided acute-care services in the county. The Federal Trade Commission (“FTC”) challenged the merger, claiming that it would enable the hospital authority to raise prices for such services, but saw its case rebuffed when lower courts held that the state action doctrine shielded the hospital authority’s decision from antitrust scrutiny. A unanimous Supreme Court reversed, holding that there was no “affirmative evidence” that the State of Georgia intended to authorize hospital authorities to engage in anticompetitive mergers.

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