Ftc To Review Non-hsr Transactions – Could Health Care Be Next?
The Federal Trade Commission (“FTC”) has a statutory right under the Hart Scott Rodino Act (“HSR”) to review acquisitions and mergers over certain financial thresholds. However, many “standard transactions” do not satisfy the financial thresholds and thus no advance notification to the FTC of the transaction is required.
While determining whether a particular transaction is subject to HSR filing can be complex, for 2020 the “size of transaction” threshold is approximately $94 million and the “size of party thresholds” are approximately $18.8 million and $188 million, respectively. Because only a limited set of transactions will typically satisfy either of these thresholds, a vast majority tend to go unnoticed by the FTC unless the transaction is brought to the FTC’s attention or called into question by some other means.
The FTC announced that it is undertaking a “6(b) study” to assess the HSR thresholds in the technology industry by issuing Special Orders to five technology firms related to prior non-reportable transactions. That being said, the FTC has historically been very active in the health care industry and a large part of its antitrust enforcement efforts occur in the health care space.
On February 11, 2020, FTC Commissioners Wilson and Chopra issued a statement indicating that while they support the FTC’s 6(b) study of technology transactions, they are similarly concerned that the HSR thresholds may not be sufficient to protect consumers of health care items and services.
The FTC Commissioners specifically cited as an example that the number of independent dialysis providers has shrunk such that two national companies appear to hold nearly all of the dialysis market share. They assert that this has by and large come through a series of transactions that fell below the HSR thresholds.
The Commissioners also called out as concerning “similar patterns of ‘stealth consolidation’” in the hospital and pharmaceutical industries. The Commissioners formally encouraged the FTC to develop further 6(b) studies in the health care and other industry sectors to obtain a more complete understanding of the competitive effects of non-HSR reportable transactions. Should the FTC undertake such a study or expand the current 6(b) study in the health care space, it could result in more scrutiny on what are or were otherwise non-reportable health care transactions.
 Section 6(b) of the HSR authorizes the FTC to undertake studies that do not have a law enforcement purpose.