Antitrust & Competition Quarterly Updates
- The DOJ withdrew long-standing antitrust healthcare policy statements that healthcare industry participants had relied on in crafting antitrust guidance, policies, and compliance programs for nearly three decades.
- Despite scrutiny, the FTC declined to challenge Amazon’s acquisition of One Medical but issued an unorthodox statement post-closing informing the parties “to be on notice” that the FTC will continue to closely monitor the parties’ use of protected health information and warning that any violations could result in an enforcement action under Section 5 of the FTC Act.
- The agencies continued appeals of high-profile matters even after novel theories of harm were rejected by lower-court judges. The FTC’s disdain for Certificates of Public Advantage (COPAs) persists, resulting in one abandoned transaction and one pending litigation in both federal and state court.
- Consistent with leadership’s prior statements, DOJ vowed to continue its enforcement against employer wage-fixing and no-poach agreements in the healthcare space, despite another loss at trial in the Manahe case.
I. Department of Justice Withdraws Long-Standing Antitrust Healthcare Policy Statements
On February 2, 2023, the Antitrust Division of the US Department of Justice (DOJ) announced the withdrawal of its support for three joint policy statements with the Federal Trade Commission (FTC, and collectively with the DOJ, the agencies), each of which created antitrust safety zones in the healthcare industry.1 Healthcare industry participants and antitrust practitioners had relied on these joint policy statements—some of which had been in place for almost 30 years—in developing antitrust guidance, policies, and compliance programs. The three joint policy statements are the Antitrust Enforcement Policy Statements in the Health Care Area (1993), Statements of Antitrust Enforcement Policy in Health Care (1996), and the Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program (2011) (collectively, the healthcare policy statements). The DOJ’s announcement brings an abrupt change to the status quo in healthcare antitrust regulation, again shifting the antitrust landscape and removing the certainty and safe harbors these policies established.
The 1993 policy statements issued by the agencies provided safety zones for various healthcare activities, including mergers, joint purchasing agreements, and participation in exchanges of price and cost information.2 Activities that fell within these safety zones were exempted from antitrust scrutiny. The 1996 policy statements clarified and expanded the agencies’ 1993 guidance to new healthcare arrangements and business models, offered hypothetical scenarios to clarify the agencies’ application of the enumerated safety zones, and explained how the agencies would analyze conduct falling outside of the safety zones.3 Following the passage of the Affordable Care Act in 2010, the 2011 policy statements explicitly addressed accountable care organizations (ACOs) and created a safety zone for them.4 In addition, the 2011 policy statements discussed scenarios in which the agencies would apply a “rule-of-reason” analysis and provided guidance regarding activities that pose a heightened risk of antitrust scrutiny.
For the past three decades, parties in the healthcare industry could take comfort in knowing that information sharing was permissible if: (1) it was managed by a third party; (2) the shared data was more than three months old; and (3) the data was assembled from at least five providers (and no single provider’s data contributed more than 25% of the “weight” of any statistic shared).5 This policy, articulated in the 1993 policy statements, also informed the agencies’ position on other industries outside of healthcare.
In discussing its rationale for the withdrawal of these policy statements, DOJ remarked that “the healthcare landscape has changed significantly” since these guidelines were first released 30 years ago.6 DOJ further noted that the healthcare policy statements were “overly permissive” in some areas, specifically with regard to information sharing.7 Doha Mekki, a principal deputy at the DOJ, stated that industry consolidation and an “evolved” view of healthcare economics were additional rationales for the withdrawal.8 With the DOJ’s action, healthcare industry participants should consult antitrust counsel when sharing any information on prices, costs, and wages outside their immediate business or practice. Further, healthcare industry participants need to be careful about relying on prior policies or internal guidance based on these withdrawn policies.
While the FTC has not yet directly commented on the DOJ’s revocation of the healthcare policy statements, it is expected that the FTC may make a formal statement on this topic soon. DOJ’s decision to withdraw these long-standing statements (and the FTC’s acquiescence) creates further uncertainty and will require healthcare industry participants to reevaluate existing policies.
II. FTC Declines to Challenge Amazon/One Medical After Second Request and Detailed Investigation but Issues Unusual Post-Closing Statement Warning of Continued Monitoring and Potential Future Enforcement
In July 2022, Amazon announced a $3.9 billion acquisition of One Medical, a membership-based primary care practice. Despite a lack of direct competition between the merging parties, given Amazon’s lack of presence in telemedicine or in-office primary care, the deal received an FTC Second Request in early September 2022. In early December 2022, the FTC sent subpoenas to current and former customers of One Medical, requesting information about Amazon Web Services, among other topics.
After investigating the transaction for approximately six months, the FTC opted not to challenge the deal, and Amazon announced the closing of its acquisition of One Medical on February 22, 2023. However, on February 27, 2023, just five days after the closing, the FTC issued a somewhat unorthodox statement, noting that the parties’ “conduct with respect to sensitive data they hold could risk violating consumer protection laws.”9 In the statement, which was jointly issued by FTC Chair Lina M. Khan and Commissioners Alvaro Bedoya, Rebecca K. Slaughter, and Christine Wilson, the FTC specifically referenced public statements from both companies regarding the manner in which each intends to collect and protect consumer data post-acquisition, including personal health information. Further, the companies announced that “[a]s required by law, Amazon will never share One Medical patients’ personal health information outside of One Medical for advertising or marketing purposes without clear permission from the patient.”10 The FTC noted that these statements constitute representations made to the public, and that the FTC would continue to monitor the parties based on these data issues.
The FTC statement then goes even further, warning Amazon and One Medical that companies that fail to abide by the representations made to the public, don’t safeguard appropriately sensitive data, or fail to obtain their consumers’ consent for marketing based on their health data can violate Section 5 of the FTC Act.11 The statement includes a thinly veiled threat that the FTC would take action if these representations made by the parties to the public were not honored. The statement also recommends that Amazon and One Medical make clear how they will use any patient data for purposes beyond the provision of healthcare post-closing.
While Amazon garners a different level of antitrust scrutiny given its size and profile, any company operating in the healthcare space should be mindful of the warning issued by the FTC in this statement. Indeed, the FTC expressly put Amazon, One Medical, and all other players operating in the healthcare space on notice that the FTC intends to continue its scrutiny of the industry and bring enforcement actions as warranted, including through its new interpretation of expansive powers under Section 5 of the FTC Act.12
III. Updates on Agencies’ Appeals of Lower-Court Losses and FTC’s Continued Disdain for Certificates of Public Advantage
The agencies’ appetite to bring aggressive enforcement actions has not subsided. Despite losses in lower courts, the agencies have shown they are willing to appeal and continue to fight matters even after novel theories of harm have been rejected by skeptical judges. Initially discussed in our Q3 and Q4 updates, the Illumina/GRAIL and UnitedHealth/Change transactions remained in the agencies’ crosshairs, inflicting further meaningful costs on the respective parties. Further, the FTC’s disdain for certificates of public advantage (COPA) has persisted, resulting in one abandoned transaction that the FTC had publicly opposed and another active battle pending in both federal and state court involving a COPA and HSR filing applicability.
Full FTC Commission Orders Unwinding of Illumina/GRAIL and Illumina’s Fast-Track Appeal in the Fifth Circuit
As predicted in our Q4 update, on April 3, 2023, the full FTC Commission issued a decision ordering the unwinding of Illumina’s $8 billion acquisition of GRAIL, stating that the transaction is likely to be detrimental to competition in the relevant market. This unsurprising decision—given that the full commission authorized the original complaint against Illumina—reverses an FTC administrative law judge’s ruling that had initially rejected the FTC’s merger challenge in September 2022. As a reminder, the European Commission (EC) moved to block the deal in September 2022, although the parties had already closed the deal one month prior to the EC’s decision, arguing that the EC did not have jurisdiction to review the transaction.13
The full FTC Commission’s ruling marked the final step in the administrative proceeding in the US. However, on April 5, 2023, the merging parties appealed the FTC’s decision to the US Circuit Court of Appeals for the Fifth Circuit. Illumina’s motion argued that allowing the deal to proceed would revolutionize cancer treatment and save lives by accelerating adoption of GRAIL’s tests. The FTC’s response to that motion claimed that these assertions were speculative. The FTC also highlighted the aforementioned EC order preventing the parties from integrating, arguing that accelerating the appeal would not be useful. On April 18, 2023, the US Circuit Court of Appeals for the Fifth Circuit granted Illumina’s motion to fast-track its appeal in a brief order that did not provide the rationale for the ruling.
Illumina’s appeal of the FTC’s order is the last step in a prolonged US regulatory process, and the Fifth Circuit’s decision will be closely watched. Meanwhile, Illumina is still fighting the case in Europe as well, appealing the EC’s order requiring Illumina to divest GRAIL and unwind the deal.
DOJ Changes Course and Drops Appeal of UnitedHealth/Change Healthcare Decision
Despite speculation regarding the DOJ’s desire to continue its challenge, the DOJ dropped its appeal of the US District Court for the District of Columbia’s order denying the DOJ’s request for a permanent injunction in connection with UnitedHealth Group’s acquisition of Change Healthcare on March 20, 2023. This was a change in course—in November 2022, the DOJ had filed a notice of appeal with the DC Circuit Court arguing that the transaction would give UnitedHealth access to its competitors’ data and result in an increase in healthcare costs. It appears that the DOJ may have recognized the hurdle of overcoming the deficiencies noted by the trial court highlighted in our Q3 update. Another factor in the DOJ’s decision to halt its appeal may have been a desire to avoid creating additional unfavorable precedent, particularly given the vertical issues involved,14 that could affect future merger challenges in the healthcare space and other industries. Regardless, the DOJ finally relented more than two years after the transaction’s announcement.
FTC Comments on Abandonment of SUNY Upstate Medical/Crouse Health System Deal
As reported in our Q4 update, the FTC submitted an objection to a proposed COPA covering a merger between SUNY Upstate Medical University and Crouse Health System. The FTC’s investigation alleged that this transaction would result in the merged entity gaining a combined share of close to 67% of commercially insured inpatient hospital services in the relevant county and would have reduced the number of hospital options available from three to two.15
On February 16, 2023, SUNY and Crouse announced their decision to walk away from the deal, opting to sign an affiliation agreement instead. On the same day, the director of the FTC’s Office of Policy Planning, Elizabeth Wilkins, issued a statement expressing her satisfaction with the parties’ decision, reiterating the FTC’s belief that the transaction “presented substantial risk of serious competitive and consumer harm in the form of higher healthcare costs, lower quality, reduced innovation, reduced access to care, and depressed wages for hospital employees.” 16
LCMC/HCA: State and Federal Court Cases Regarding COPA and HSR Applicability
As noted in our Q4 update, the Louisiana Department of Justice granted a COPA for Louisiana Children’s Medical Center’s (LCMC) acquisition of three Tulane University hospitals from HCA Healthcare Inc. (HCA) on December 28, 2022. Just days later, on January 3, 2023, LCMC announced that it had finalized the acquisition of the three HCA hospitals, although it did so without reporting the deal to the agencies under the HSR Act. Two months later, on March 3, 2023, the FTC contacted LCMC’s counsel inquiring about the parties’ HSR analysis and decision not to file. Following discussions regarding the parties’ purported justifications for not filing, in early April the FTC ordered the parties to submit an HSR filing, pay the HSR filing fee of at least $30,000, and pay daily penalties for failing to file in the amount of $46,517 up to and including January 10, 2023, and $50,120 per day for each day after.17
On April 19, 2023, LCMC filed a complaint in Louisiana state court against Merrick Garland (in his official capacity as attorney general of the United States), the DOJ, the FTC, and the United States, seeking a declaratory judgment that the HSR Act does not apply to its acquisition of the HCA facilities.18 The complaint alleged that the transaction is immune from federal antitrust laws under the doctrine of state action immunity as a result of the issuance of the COPA. LCMC’s argument rests on the authorization it received from the state Legislature and attorney general to complete the acquisition at hand, highlighting that these entities had concluded that the acquisition would further the state’s policy goals for the health and welfare of its citizens.
Just one day later, the FTC sued the parties for violating federal reporting laws (under the HSR Act) based on LCMC’s closing of the $150 million acquisition without reporting it to the agencies and without abiding by the mandatory waiting period.19 The FTC’s petition was filed with the US District Court for the District of Columbia, and although the COPA was granted prior to the transaction closing, the FTC requested a temporary restraining order and a preliminary injunction requiring that LCMC and HCA file the transaction under the HSR Act, that LCMC hold the acquired assets separate from its own while the FTC investigates the acquisition, and that LCMC pay a statutory penalty.20
On April 23, 2023, the state of Louisiana, through its attorney general, Jeff Landry, asked a federal judge in the US District Court for the Eastern District of Louisiana to grant its request to intervene in the FTC’s challenge of LCMC’s plans to acquire HCA Healthcare. On April 24, 2023, LCMC filed motions in the US District Court for the District of Columbia seeking to transfer and dismiss the FTC’s case alleging failed HSR compliance. Just two days later, on April 26, 2023, the FTC opposed LCMC’s motion to dismiss or transfer, and LCMC filed its opposition in DC District Court to the FTC’s petition for injunctive relief. On May 9, 2023, LCMC and HCA filed a motion requesting a status conference in anticipation of submitting an expedited briefing schedule.
The outcome of this case remains uncertain given the dueling lawsuits, although it will be hotly contested and closely watched. As noted above, both parties—LCMC and HCA—could face daily fines amounting to roughly $6 million, given the time frame at issue. In addition to potentially significant fines, this case will also be instructive as to COPA and the state of HSR applicability and underscores the lengths to which the FTC is willing to go in its campaign against COPAs across the US.
IV. Department of Justice’s Wage-Fixing and No-Poach Enforcement Proceeds Despite Setbacks
In October 2016, the FTC and the DOJ issued a joint release emphasizing their commitment to step up enforcement, including criminal prosecution, against employers that enter into anticompetitive agreements to fix wages or that agree to not poach each other’s workers.21
Despite this commitment, DOJ has experienced limited success in no-poach criminal prosecutions, including another loss on March 22, 2023, when a jury fully acquitted several defendants in a federal action in Maine. In United States v. Manahe, DOJ alleged that defendants conspired to fix wages and agreed to not solicit each other’s home health aides. DOJ’s indictment contained written statements from the defendants that they agreed not to solicit clients or employees from the others’ businesses and to maintain ceilings on wages for personal support specialists.22 At trial, defendants admitted that they discussed setting wages, agreed not to hire each other’s health aides, and drafted a written agreement reflecting this. However, despite these admissions, the defendants were able to persuade the jury that no agreement was actually formed, as the defendants never signed their draft agreement.23 All of the defendants were acquitted.
Manahe is the Antitrust Division’s third recent loss at trial for a wage-fixing case. In April 2022, the DOJ lost two wage-fixing cases at trial—United States v. Jindal and United States v. DaVita Inc. (one defendant in Jindal was convicted, however, for obstruction of justice). On April 28, 2023, the District Court of Connecticut handed the DOJ another loss in a no-poach criminal case involving the aerospace industry.24 DOJ has obtained only one successful conviction for wage-fixing—in United States v. Hee, one of two defendants was found guilty of fixing nursing wages in Nevada.25
Despite these losses, the DOJ appears undeterred in continuing its campaign against wage-fixing and no-poach matters. In March 2022, Assistant Attorney General for the Antitrust Division Jonathan Kanter called the DOJ’s criminal wage-fixing cases against employers “righteous cases” that defend American workers’ right to earn a living.26 Kanter vowed to “continue, when the facts and the law support it, to bring those cases.”27 He also highlighted the DOJ’s four successes at the motion-to-dismiss stage, which show that courts support the legal theory that antitrust harm to workers in wage-fixing cases is just as actionable as fixing prices against consumers. Kanter affirmed that the DOJ enforcers “are expanding our toolkit to improve detection of criminal and cartel behavior” and “modernizing the tools that we use to make sure that we are detecting . . . antitrust crimes.”28 Making good on such promises, on March 15, 2023, in United States v. Lopez, a grand jury indicted a healthcare staffing executive for conspiring to fix the wages of Las Vegas nurses between March 2016 and May 2019.29
Despite its lackluster record, the DOJ remains committed to cracking down on wage-fixing and no-poach conduct in the healthcare space. Even modestly sized commercial activity, as measured by the dollar amounts involved, does not prevent scrutiny from the DOJ’s watchful eye, as suggested by the relatively small fines at issue in the Hee conviction ($134,000). Healthcare industry participants should therefore be mindful of antitrust scrutiny of human resource practices and make sure that antitrust compliance programs include training on hiring practices and interactions with competitors.
 US Department of Justice, “Justice Department Withdraws Outdated Enforcement Policy Statements” (Feb. 3, 2023).
 US Department of Justice, “Antitrust Enforcement Policy Statements Issued for Health Care Industry” (Sep. 15, 1993).
 US Department of Justice and Federal Trade Commission, “Statements of Antitrust Enforcement Policy in Health Care” (Aug. 1996).
 US Department of Justice and Federal Trade Commission, “Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program” (Oct. 20, 2011).
 See Note 2, supra.
 US Department of Justice, “Justice Department Withdraws Outdated Enforcement Policy Statements” (Feb. 3, 2023).
 US Department of Justice, “Principal Deputy Assistant Attorney General Doha Mekki of the Antitrust Division Delivers Remarks at GCR Live: Law Leaders Global 2023” (Feb. 2, 2023).
 Federal Trade Commission, “Joint Statement of Chair Khan, Commissioner Slaughter, Commissioner Wilson, and Commissioner Bedoya Regarding Amazon.com, Inc.’s Acquisition of 1Life Healthcare, Inc.” (Feb. 27, 2023).
 See One Medical, “Update from One Medical on Agreement to be Acquired by Amazon” (Aug. 2, 2022).
 See Note 9, supra.
 See Goodwin client alert, November 11, 2022.
 Reuters, “Exclusive: Illumina to face EU fine of 10% of turnover over Grail deal” (Jan. 11, 2023).
 A vertical merger combines companies at different levels of the supply chain rather than combining direct competitors at the same level of the supply chain. The DOJ also failed in its vertical challenge of AT&T’s purchase of Time Warner in 2018.
 Federal Trade Commission, “FTC Staff Opposes Proposed Certificate of Public Advantage That Could Shield SUNY Upstate Medical University’s Acquisition of Crouse Health System from Antitrust Scrutiny” (Oct. 14, 2022).
 Federal Trade Commission, “Statement of Elizabeth Wilkins, Director of the FTC’s Office of Policy Planning, on the Decision of SUNY Upstate Medical University and Crouse Health System, Inc. to Drop Their Proposed Merger” (Feb. 16, 2023).
 LCMC Complaint for Declaratory Judgment, LCMC Health v. Merrick Garland in his official capacity as Attorney General of the United States, United States Department of Justice, Federal Trade Commission and United States of America, No. 2:23-cv-01305, ¶ 65 (E.D. La. Apr. 19, 2023).
 Federal Trade Commission, “FTC Sues to Stop the Potentially Illegal Integration of New Orleans Area Hospitals Over Failure to Follow Federal Reporting Law” (April 20, 2023).
 Federal Trade Commission Complaint, ECF No. 1, Federal Trade Commission v. Louisiana Children’s Medical Center and HCA Healthcare, Inc. No. 1:23-cv-01103 (D.C.C. Apr. 20, 2023).
 Federal Trade Commission, “FTC and DOJ Release Guidance for Human Resource Professionals on How Antitrust Law Applies to Employee Hiring and Compensation” (Oct. 20, 2016).
 Indictment, United States v. Manahe, No. 2:22-cr-00013 (D. Me. Jan. 27, 2022), ECF No. 1, 6-7.
 Jury Verdict, United States v. Manahe, No. 2:22-cr-00013 (D. Me. Mar. 22, 2023), ECF No. 247.
 Ruling on Defendant’s Motion for Acquittal, ECF. No. 599, United States v. Patel et. al, 3:21-cr-00220 (D. Conn. Apr. 28, 2023).
 Plea Agreement, ECF No. 106, United States v. Hee, 2:21-cr-00098 (D. Nev. Oct. 2022).
 US Department of Justice, “Assistant Attorney General for the Antitrust Division Jonathan Kanter Speaks on the ‘Enforcers Roundtable’ Panel at the ABA Annual Antitrust Spring Meeting,” see 00:42:00 (Mar. 31, 2023).
 US Department of Justice, “Health Care Staffing Executive Indicted for Fixing Wages of Nurses” (Mar. 16, 2023).
Andrew LacyPartnerCo-Chair, Antitrust + Competition
Arman OrucPartnerCo-Chair, Antitrust + Competition