FTC Clamps Down on Anticompetitive Mergers, Including DaVita Acquisition

Prior approval will once again be standard practice.

The Federal Trade Commission (FTC) announced on Monday that it will restore its practice of routinely restricting future acquisitions for parties that pursue anticompetitive mergers.

The FTC stated that "merger enforcement orders will once again require acquisitive firms to obtain prior approval from the agency before closing any future transaction affecting each relevant market for which a violation was alleged, for a minimum of ten years."

The new Prior Approval Policy Statement was released three months after the FTC rescinded the 1995 Policy Statement on Prior Approval and Prior Notice Provisions, which prevented the Commission from imposing merger restrictions.

"The FTC should not have to waste valuable time and resources investigating clearly anticompetitive deals that should have died in the boardroom," Holly Vedova, Director of the Bureau of Competition, said in a statement. "Restoring the long-standing prior approval policy forces acquisitive firms to think twice before going on a buying binge because the FTC can simply say no."

In conjunction, the FTC also announced a proposed order that would impose strict limits on future mergers by DaVita, Inc. According to an FTC complaint, the dialysis service provider's proposed acquisition of the University of Utah Health's dialysis clinics would create a monopoly in the greater Provo, Utah area.

Under the proposed order, DaVita would:

• Divest three Provo-area dialysis clinics and provide transition services for up to one year
• Be prohibited from entering into or enforcing any non-compete agreements with physicians that are employed by the University that would restrict their ability to work at a competitor's clinic
• Be prohibited from entering into any agreements that restricts Sanderling Renal Services from soliciting DaVita's employees for hire
• Be prohibited from directly soliciting patients who receive services from the divested clinics for two years
• Have to receive prior approval from the FTC prior to acquiring new ownership interest in a dialysis clinic anywhere in Utah for the next decade

"DaVita has a history of attempting to buy up competing dialysis clinics in an industry that is already highly concentrated, in large part due to the acquisition activity of DaVita and other large dialysis clinic chains," Vedova said. "This is a big concern, and it is compounded by the fact that the limited number of nephrologists available to work at the clinics creates an opportunity for anticompetitive restrictions on labor. To address these concerns, the Commission’s order includes important provisions that guard against restrictions on worker mobility and protect Utah consumers from other anti-competitive practices in this critical, life-saving health care market."