FTC Ends Administrative Challenge To Hospital Merger In Grand Rapids, Michigan

The Federal Trade Commission today ended its administrative challenge to a hospital merger in Grand Rapids, Michigan, after concluding that further litigation in the case is not in the public interest. The Commission action is in keeping with a policy statement issued in June 1995 in which the FTC said it would determine on a case-by-case basis whether to pursue administrative litigation in merger cases after a federal district court has declined to bar the companies from merging pending the outcome of an administrative trial.

In this case, the FTC had alleged in an administrative complaint that the merger of Butterworth Hospital and Blodgett Memorial Medical Center would violate federal antitrust laws by substantially reducing competition in the market for acute-care inpatient hospital services in the Grand Rapids area. Prior to issuing that complaint, the FTC had sought a federal district court order to block the merger pending the outcome of the administrative trial process. The federal district court action was intended to maintain the independence and viability of the two hospitals so that, if the FTC ultimately won the administrative case, it could devise an effective remedy to restore competition.

The district court denied the FTC’s motion for a preliminary injunction, and the Commission appealed to the Sixth Circuit Court of Appeals. The Circuit Court affirmed the denial of the preliminary injunction. On September 23, 1997, the hospitals announced that they will immediately merge the hospitals into a single organization.

The Commission vote to dismiss the administrative complaint in this case was 3-0, with Chairman Pitofsky recused.

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