STATEMENT OF CHAIRMAN ROBERT PITOFSKY AND COMMISSIONERS SHEILA F. ANTHONY AND MOZELLE W. THOMPSON
IN THE MATTER OF
COLUMBIA/HCA HEALTHCARE CORP.
DOCKET NOS. C-3472, C-3505, C-3538, C-3544 AND D.9256
On April 9, 1998, Columbia/HCA Healthcare Corporation ("Columbia/HCA") filed a Petition pursuant to Section 2.51 of the Commissions Rules of Practice, 16 C.F.R. 2.51, and the Statement of Federal Trade Commission Policy Concerning Prior Approval and Prior Notice Provisions ("Prior Approval Policy Statement") to Reopen and Modify the Orders in Docket Nos. C-3472, C-3505, C-3538, C-3544 and D.9256. By that Petition, Columbia/HCA requests that the prior approval requirements in the Orders be deleted and, as an alternative, that the Orders be modified to require prior notification of potentially anticompetitive transactions below the Hart-Scott-Rodino ("HSR") Act threshold. Upon consideration of this matter, the Commission decided to grant Columbia/HCAs Petition to delete the prior approval provisions in the Orders and replace them with prior notification provisions upon the terms set forth below.
The Commissions 1995 Prior Approval Policy Statement provides that, "as a general matter, [future] Commission orders . . . will not include prior approval or prior notification requirements." If "a Petition is filed to reopen and modify an order, pursuant to the [Policy Statement], the Commission will apply a rebuttable presumption that the public interest requires reopening of the order and modification of the prior approval requirement." But the Statement also directs that the terms of any prior notification requirement be considered "on a case-by-case basis" in light of the characteristics of particular markets, market participants and other relevant factors. Significantly, the Commission "reserves its equitable power to fashion remedies needed to protect the public interest, including by ordering limited prior approval and/or notification in certain limited circumstances." See Prior Approval Policy Statement, 60 Fed. Reg. 29745, 39746 (Aug. 3, 1995); 4 Trade Reg. Rep. (CCH) ¶ 13,241(emphasis added).
The Commission, exercising its equitable power, has substituted prior notification for prior approval provisions in the relevant Orders. In doing so the Commission will require Columbia to provide thirty (30) days advance notice of any proposed merger or acquisition transaction as defined in the Orders ("first waiting period"). If during this first waiting period the Commission requests further information concerning a proposed transaction, Columbia shall not take any action, other than planning, in furtherance of such a transaction until thirty (30) days after substantially complying with such request for additional information ("second waiting period") or such shorter waiting period as may be granted by letter from the Bureau of Competition. This second waiting period is consistent with several cases where the Commission believed it was necessary to protect the public interest from a credible risk that the defendant would once again engage in anticompetitive transactions. See MD Physicians of SW Louisiana, FTC File No. 941 0095; Mesa County Physicians Independent Practice Association, Docket No. D.9284.
In this case, first and foremost, there is a credible risk that Columbia/HCA would engage in future anticompetitive acquisitions covered by the Orders that would not be subject to the reporting requirements of Section 7A of the Clayton Act, commonly referred to as the HSR Act. Indeed, the complaints in each of these matters involved transactions that if filed individually would have fallen below the reporting threshold of the HSR Act. Second, Columbia/HCAs earlier conduct suggests a reckless disregard with respect to satisfying obligations in Commission orders. Indeed, on July 30, 1998 the Commission imposed a $2.5 million civil penalty upon Columbia/HCA for its violation of Commission orders by: (1) failing to divest in a timely manner two Utah Hospitals and its joint venture interest in South Seminole Hospital in Florida; and (2) violating a related Hold Separate Agreement governing assets it acquired in Utah as a result of its merger with Healthtrust Inc. See FTC File No. 961 0013. Given this history, it is both prudent and consistent with our policy to require additional review time.
For these reasons, we voted to grant Columbias Petition to Reopen the Orders in Docket Numbers C-3472, C-3505, C-3538, C-3544 and D.9256, and Modify the Orders to delete the prior approval provisions, but also asked that they be replaced with prior notice provisions that have a thirty (30) day second waiting period.