FTC Challenging Proposed Chicago Health Systems Merger

merger, Naperville business attorneyFor many small and mid-size companies, a merger presents the opportunity to reach more customers with increased efficiency. In most cases, merging with another business is a profitable decision for both existing entities, their owners, their shareholders, and their client base. Sometimes, however, government regulators become concerned about a merger’s potential effect on the market and on the industry as a whole. When such concerns are raised, the Federal Trade Commission must review a proposed merger and may ultimately decide to block the transaction.

In my practice as a business law attorney, I have worked with many business owners seeking a merger with another company. I understand the law and potential obstacles that regulators can present, and I am ready to assist your company in taking steps toward increasing profitability.

Local, Large-Scale Example

The Federal Trade Commission (FTC) has requested a preliminary injunction to temporarily stop a proposed merger between Advocate Health Care and NorthShore University HealthSystem, two prominent Chicago-area hospital systems. The injunction is intended to pause the merger activity while the FTC investigates the deal and determines if it should be allowed to proceed.

As the state’s largest hospital chain, Advocate currently operates 12 hospitals throughout the greater Chicago region and Peoria, including locations in Libertyville and Park Ridge. NorthShore runs four facilities north of Chicago, with health centers in Evanston, Skokie, Glenview and Highland Park. The FTC has expressed concern that a merger would grant the combined system would control more than half of inpatient hospital services in the area north of the city.

Reports indicate that if the injunction is granted at a hearing now scheduled for next week, the health care systems are unlikely to continue to pursue the merger. Conversely, if the FTC fails to get an injunction in such cases, the agency typically backs down and allows the deal to continue.

Anti-Trust Measures

According to the FTC, the Commission, along with the Department of Justice, reviews more than 1,000 mergers each year. More than 95 percent of those proposed deals present no issues regarding competition. Those that do, however, must be investigated more thoroughly, especially mergers that involve direct competitors. These deals, known as horizontal mergers, have the potential to significantly reduce competition or possibly create a monopoly in a particular market or field. The FTC will raise challenges to proposed mergers that it believes will lead to higher prices, fewer or reduced-quality goods and services, and less innovation in the industry.

Guidance for Your Merger

If you are developing preliminary plans for a merger, it is important to work closely with a lawyer who understands the obstacles you may be facing. Contact an experienced Naperville business law attorney to discuss your goals today. We will help you address any and all challenges presented by regulatory agencies and assist you in increasing your company’s profitability through a merger.

 

Sources:

Chicago Tribune

Crain’s Chicago Business

Federal Trade Commission