competition

Federal Trade Commission v. Phoebe Putney Health System, Inc. (11-1160)

Phoebe Putney Health Systems ("PPHS") leased and operated one of two hospitals in Dougherty County, Georgia. PPHS then leased the other county hospital, Palmyra Medical Center, from the Hospital Corporation of America ("HCA"). In April 2011, the Federal Trade Commission ("FTC") filed a complaint against PPHS, alleging that by leasing Palmyra, PPHS violated the Clayton Act and the FTC Act by acting with anticompetitive effect. PPHS argues that it should be exempt from federal antitrust law under the state action doctrine. The Eleventh Circuit found for PPHS, stating that a private actor falls within the state action doctrine when its anticompetitive activity is foreseeable by the state legislature. The FTC urges a more stringent standard where the anticompetitive effect must be intrinsic to the state’s authorization. How the Supreme Court decides this case will dictate how state legislatures delegate power to local government entities, and whether or not they must formally articulate authorization for such an entity to act with anticompetitive effect.

Questions as Framed for the Court by the Parties: 

1. Whether the Georgia legislature, by vesting the local government entity with general corporate powers to acquire and lease out hospitals and other property, has “clearly articulated and affirmatively expressed” a “state policy to displace competition” in the market for hospital services.

2. Whether such a state policy, even if clearly articulated, would be sufficient to validate the anticompetitive conduct in this case, given that the local government entity neither actively participated in negotiating the terms of the hospital sale nor has any practical means of overseeing the hospital's operation.

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Issue(s)

Where a state legislature’s authorization leads to anticompetitive actions by a private actor, what standard will be applied to determine whether those actions are exempt from federal antitrust law?

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Federal Trade Commission v. Phoebe Putney Health System, Inc.

Unpublished

In April 2011, the Federal Trade Commission filed a complaint against Phoebe Putney Health Systems (PPHS) after PPHS leased Palmyra Medical Center from the Hospital Corporation of America (HCA). Prior to this lease, PPHS leased and operated the only other hospital in the county. The FTC alleged that by leasing Palmyra, PPHS violated the Clayton Act and the FTC Act by acting with anticompetitive effect. Respondent argues that it should be exempt from federal antitrust law under the state action doctrine. The Eleventh Circuit found for the Respondent, stating that a private actor falls within the state action doctrine when its anticompetitive activity is foreseeable by the state legislature. Petitioner urges a more stringent standard where the anticompetitive effect must be intrinsic to the state’s authorization. How the Supreme Court decides this case will dictate how state legislatures delegate power to local government entities, and whether or not they must formally articulate authorization for such an entity to act with anticompetitive effect.

Questions as Framed for the Court by the Parties: 

1. Whether the Georgia legislature, by vesting the local government entity with general corporate powers to acquire and lease out hospitals and other property, has “clearly articulated and affirmatively expressed” a “state policy to displace competition” in the market for hospital services.

2. Whether such a state policy, even if clearly articulated, would be sufficient to validate the anticompetitive conduct in this case, given that the local government entity neither actively participated in negotiating the terms of the hospital sale nor has any practical means of overseeing the hospital's operation.

top

Issue(s)

Where a state legislature’s authorization leads to anticompetitive actions by a private actor, what standard will be applied to determine whether those actions are exempt from federal antitrust law?

top

Edited by: 
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