UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

In the Matter of

BUTTERWORTH HEALTH CORPORATION, a corporation and BLODGETT MEMORIAL MEDICAL CENTER, a corporation

DOCKET NO. 9283

COMMISSIONERS:

Robert Pitofsky, Chairman
Mary L. Azcuenaga
Janet D. Steiger
Roscoe B. Starek, III

ORDER GRANTING MOTION TO DISMISS

On July 22, 1997, respondents Butterworth Health Corporation and Blodgett Memorial Medical Center ("the Hospitals") filed a Motion to Dismiss the complaint in the above- captioned case pursuant to Section 3.26(d) of the Commission’s Rules. Complaint counsel filed an Opposition to Respondents’ Motion to Dismiss the Proceedings on August 5, 1997. On August 15, 1997, the Hospitals moved for leave to file a Reply Memorandum and on September 2, 1997, Complaint Counsel moved for leave to file a Response to Respondents’ Reply Memorandum. Both motions for leave to file supplemental pleadings are granted.

These proceedings follow the Commission’s filing of an action in the United States District Court for the Western District of Michigan seeking a preliminary injunction under Section 13(b) of the Federal Trade Commission Act, 15 U.S.C. 53(b), to prevent a proposed merger of the Hospitals pending completion of an administrative proceeding to determine whether the proposed merger violates Section 7 of the Clayton Act. 15 U.S.C. 18. On September 26, 1996, the district court issued an opinion denying a preliminary injunction. FTC v. Butterworth Health Corp., 946 F. Supp. 1285 (W.D. Mich. 1996). Thereafter, the United States Court of Appeals for the Sixth Circuit affirmed the district court’s decision in an unpublished per curiam opinion. FTC v. Butterworth Health Corp., No. 96-2440 (6th Cir. July 8, 1997) (per curiam).

The rationale for Rule 3.26(d), pursuant to which the Hospitals move, is that although denial of injunctive relief by the courts does not compel the Commission, as a matter of law, to terminate its administrative case, such judicial action justifies respondents in asking the Commission to review closely whether further proceedings are appropriate. The Commission’s Policy Statement on Administrative Merger Litigation Following the Denial of a Preliminary Injunction, which was published with Rule 3.26(d), states that the Commission must determine whether to continue or terminate an administrative proceeding on a case-by-case basis. 60 Fed. Reg. 39,741, 39,743 (1995); 4 Trade Reg. Rep. (CCH) 13,242 at 20,994.

In determining whether to continue the administrative litigation, the Commission has considered the following factors set forth in the Commission’s Policy Statement:

(i) the factual findings and legal conclusions of the district court or any appellate court, (ii) any new evidence developed during the course of the preliminary injunction proceeding, (iii) whether the transaction raises important issues of fact, law, or merger policy that need resolution in administrative litigation, (iv) an overall assessment of the costs and benefits of further proceedings, and (v) any other matter that bears on whether it would be in the public interest to proceed with the merger challenge.

Id. After considering the pleadings and each of these five factors, the Commission has determined that further administrative litigation is not in the public interest.

Accordingly,

IT IS ORDERED that respondents' motion for leave to file a reply and complaint counsel's motion for leave to file a response to the reply be, and they hereby are, granted;

IT IS FURTHER ORDERED that respondents’ motion to dismiss be, and it hereby is, granted.

By the Commission, Chairman Pitofsky recused.

Donald S. Clark
Secretary

Issued: September 25, 1997