Fluent Essays

1. The Clayton Act is concerned with combinations of two or more entities through the means of mergers or joint ventures. What is the practical difference between a merger and a joint venture? Include examples 2. You have just received a call from a FTC representative who wishes to meet with you to discuss an “antitrust matter.” List five steps that you will take immediately in response to the call and in anticipation of the meeting. 3. A group of physicians would like to set up a formal network of area doctors with the intention of sharing the costs of investing in new technology, qualifying for formation of an ACO, streamlining the process of care delivery to their patients, and presenting a united front in dealing with health plans. What steps would you recommend the doctors take to minimize the chances of antitrust violations? Think in terms of structuring the new entity, the number and specialties of the physicians, favorably influencing other stakeholders in the local healthcare market, and the DOJ/FTC safe havens as described in the Statements of Antitrust Enforcement Policy in Health Care. - minimum 100 words - i attached powerpoint to help Chapter 3 Antitrust Learning Objectives Familiar with primary Federal antitrust laws. Difference between per se violation and one based on “rule of reason”. Clayton Act and consolidation of health care organizations. Legal defenses and enforcement exceptions. Minimizing risk of antitrust violations. Seeking advisory opinions from antitrust agencies. Responding to antitrust enforcement investigation. Introduction The sole purpose of antitrust laws is to protect competition. It is not the intent of the laws to protect a particular business or individual from the consequences of normal market forces, from aggressive competition by other businesses, from competitors that operate more efficiently, and even from unfair or arbitrary conduct that does not hinder competition in the overall market. Antitrust Violations A person or organization can violate one of the antitrust laws in two fundamental ways: through its own independent actions through a conspiracy with another competitor in the same market If a co-conspirator is required and none is present, there has been no violation. Sherman Antitrust Act, Section 1 Prohibits “every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several states.” Two or more persons or entities must act together to violate this law. A single person acting along cannot violate Section 1. The conspiracy need not be based on an express verbal or written agreement among the parties. It may inferred from their deeds. “Per se” Violations Under Section 1, certain trade restraints are so serious that they are considered automatic violations, without further analysis. Price-fixing Horizontal market allocation agreements Group boycotts Tying arrangements “Rule of Reason” Cases The majority of cases under Section 1 use the “rule of reason” to balance the pro-competition and anti-competition effects of an arrangement to determine the net impact on competition in the affected market. The arrangement is more likely to survive if it is short term (1-2 years), open to competitive bidding, and intended for valid purposes. 7 Sherman Antitrust Act, Section 2 “Every person who shall monopolize or attempt to monopolize, or combine or conspire with any other person or persons to monopolize any part of the trade or commerce among the several states or with foreign nations shall be deemed guilty of a felony.” Despite the felony reference, most Section 2 cases are prosecuted under civil complaints. Sherman Antitrust Act, Section 2 An entity has monopolized if it has monopoly power in a relevant market, and has either acquired/maintained that power by exclusionary/non-competitive means or used the power for exclusionary/non-competitive purposes. “Monopoly power” is the ability to control prices in the defined market or to exclude competitors from that market. Clayton Act, Section 7 The Clayton Act focuses on mergers, joint ventures, and other arrangements among two or more entities. Section 7 prohibits an organization from acquiring all or part of the stock or assets of another organization if the result will be to substantially lessen competition or tend to create a monopoly in a defined market. Robinson-Patman Act Illegal to discriminate in price between different purchasers of products or services of similar grade and quality. Violations occur when an organization (e.g., vendor of hospital supplies) sells the same product to two different hospitals at different prices and the price differential affects competition. Penalties for Antitrust Violations In serious cases, criminal convictions are possible, leading to $1 million fines per person, $100 million per organization, and prison terms up to 10 years. With civil liability, injured party may be awarded 3x the damages it has suffered plus attorneys’ fees. Defenses to Antitrust Charges State-action doctrine Noerr-Pennington exception Health Care Quality Improvement Act Non-commercial activities DOJ/FTC Statements of Antitrust Enforcement Policy in Health Care Describe health care arrangements that need not fear antitrust prosecution. Mergers among hospitals Hospital joint ventures involving high technology or specialized clinical services Providers’ collective provision of information Joint purchasing arrangements Physician network joint ventures Minimizing Risk of Antitrust Violations Never talk with competitors about prices Never seek or accept info about competitors’ practices Never agree with competitors to divide markets Never attend meetings where these issues will be discussed Do not condition sales on reciprocal sales Requesting Enforcement Agency Advisory Opinions FTC issues staff Advisory Opinions. DOJ issues Business Review Letters. Describe proposed action, obtain statement whether agency would challenge it. The opinions apply only to the parties requesting them. A favorable opinion is not an absolute defense if new information becomes available. Antitrust Compliance Program Commitment to antitrust law compliance. Mandatory compliant behavior by employees. Employee education on antitrust principles. Mandatory reporting of antitrust misconduct. Procedure for responding to suspected antitrust violations. Periodic legal review of high risk areas. Responding to Antitrust Enforcement Investigation Contact attorney experienced in antitrust law. Designate one employee to interact with the investigators. Maintain maximum attorney-client protection for internal communications. Instruct employees about rights if contacted by investigators. Protect documents against destruction. Questions