Hackensack Meridian Health and Englewood Healthcare Foundation are set to appeal after a District of New Jersey judge granted an injunction blocking the merger of the two parties earlier this month. The Federal Trade Commission (FTC) sought to block the transaction under Section 7 of the Clayton Act, which bars mergers that “may be substantially to lessen competition, or tend to create a monopoly.”
The Third Circuit will hear the case going forward, although no dates have been set.
In the underlying case, the FTC sought an injunction to block the transaction between the two New Jersey healthcare companies until agency proceedings were complete. The product market at issue in the case is “a cluster of inpatient general acute care (“GAC”) services sold and provided to commercial insurers and their members.”
Hackensack is described in the opinion as the largest healthcare system in the state of New Jersey, and its current iteration was itself the result of a merger in 2016. The court, explaining the background of the merger, noted that the defendants did not submit evidence that Hacksenack was suffering capacity issues prior to merger talks beginning; instead, all evidence of that issue appears that Englewood initiated the merger bid, although Hackensack will end up as the controlling entity.
The judge found that the FTC was likely to succeed on the merits of the case. It rejected the hospitals’ arguments of the geographic market at issue, and favored the narrow FTC market definition of solely Bergen County, New Jersey.
In assessing anticompetitive effect, the court relied on the agency’s use of the Herfendahl-Hirschman Index, a measure often used in antitrust cases to determine market concentration. The index here, the judge stated, indicated that the market would become much more highly concentrated post-merger. The court also favored the FTC’s interest in enforcing antitrust laws when determining that equity favored the agency.
The defendants are represented by Winston & Strawn LLP and Faegre Drinker Biddle & Reath LLP.