Specifically, JAB must get prior approval from the FTC before acquiring a specialty or emergency veterinary clinic within 25 miles of any JAB-owned clinic anywhere in California or Texas (not just the local markets at issue) within the next 10 years. More significantly, under the Consent Agreement, JAB also grants the FTC prior approval and prior notice rights relating to future acquisitions of veterinary clinics. The Consent Agreement will require JAB to divest several clinics in the markets at issue in Texas and California. On June 13, 2022, the FTC Commissioners voted 5-0 to approve a Consent Agreement regarding the transaction. The acquisition would substantially increase concentration in each market, leaving the combined firm as the only provider in some markets and as one of only two providers in other markets, according to the complaint. The complaint alleged that, as originally proposed, the acquisition was likely to be anticompetitive in three geographic markets for various types of veterinary care: in and around Austin, Texas, and San Francisco, Oakland, Berkeley, and Concord, California. JAB is a $55 billion fund whose investments include Compassion-First Pet Hospitals and National Veterinary Associates, Inc. One day after the hospital complaints were filed, the FTC filed a complaint alleging that the acquisition of SAGE Veterinary Partners by a wholly owned subsidiary of private equity fund JAB Consumer Partners would eliminate head-to-head competition and increase the likelihood that the combined company could unilaterally exercise market power, resulting in higher prices and a loss of quality in the provision of specialty and emergency veterinary services. These cases are consistent with the FTC’s and DOJ’s prior pronouncements about healthcare being an area of focus and are likely to have a chilling effect on hospital mergers for the indefinite future. In both cases, the parties abandoned the challenged transaction within just two weeks, with RWJBarnabas abandoning its deal on June 14 and HCA and Steward taking the same action three days later.
Saint Peter’s University Hospital and RWJBarnabas are the only two hospitals in New Brunswick, New Jersey and are located just a mile apart. In the RWJBarnabas/Saint Peter’s case, the FTC complaint alleged that the proposed acquisition would eliminate head-to-head competition between the parties in Middlesex County, New Jersey. In the HCA/Steward case, the FTC alleged that, as the second and fourth largest healthcare systems in the Wasatch Front region of Utah, HCA and Steward helped to keep costs down by competing with one another.
#Focused scrutiny trial#
If the Commission determines that an administrative trial is in the public interest, allegations will be tried before an administrative law judge.
The FTC issues an administrative complaint when it believes the law has been or is being violated.
Both cases involved traditional antitrust analysis of market shares for general acute care services, and in both cases, the Commission voted 5-0 to seek administrative trials. June began with the FTC voting to file an administrative complaint and a lawsuit in federal court to block two proposed hospital transactions – HCA’s merger with Steward Health Care System in Utah and RWJBarnabas Health’s acquisition of Saint Peter’s Healthcare System in New Jersey. While the industry has expected increased scrutiny in the hospital context, the recent expanded focus on private equity-backed “roll-up” provider transactions has been somewhat more surprising because, despite rhetoric in recent headlines, such transactions rarely have the type of market dynamics that invoke antitrust scrutiny. June was a very busy month for FTC enforcement actions and may signal a potential sea change in the near-term viability of large healthcare deals for both hospital and private equity-backed provider platforms.