IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MISSOURI
SOUTHEASTERN DIVISION

FEDERAL TRADE COMMISSION,

Plaintiff,

vs.

TENET HEALTHCARE CORPORATION, a Nevada corporation, and POPLAR BLUFF PHYSICIANS GROUP, INC. d/b/a Doctors Regional Medical Center, a Missouri corporation,

Defendants.

Civil Action No.

United States District Judge

COMPLAINT FOR PRELIMINARY INJUNCTION PURSUANT TO SECTION 13(b) OF THE FEDERAL TRADE COMMISSION ACT

Tenet Healthcare Corporation’s ("Tenet") acquisition of Poplar Bluff Physicians Group, Inc., may substantially lessen competition. This merger, involving the only two general hospitals in Butler County, Missouri, will create a virtual monopoly in an eight-county area, and likely will increase hospital prices and reduce quality.

Therefore, pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. 53(b), the Federal Trade Commission ("Commission"), by its designated attorneys, petitions the Court to maintain the status quo and enjoin defendants from allowing Tenet to acquire any stock, assets, or other interests in defendant Poplar Bluff Physicians Group, Inc., during the pendency of an administrative proceeding, which will be commenced by the Commission pursuant to Sections 7 and 11 of the Clayton Act, 15 U.S.C. 18 and 21, and Section 5(b) of the FTC Act, 15 U.S.C. 45(b).

THE PARTIES

1. The Commission is an administrative agency of the United States Government established, organized, and existing pursuant to the FTC Act, 15 U.S.C. 41 et seq., with its principal offices at Sixth Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580. The Commission is vested with authority and responsibility for enforcing, inter alia, Section 7 of the Clayton Act, 15 U.S.C. 18, and Section 5 of the FTC Act, 15 U.S.C. 45.

2. Defendant Tenet is a for-profit corporation organized and existing under the laws of the State of Nevada, with its principal place of business at 3820 State Street, Santa Barbara, CA 93105. Tenet controls and operates approximately 124 general acute care hospitals, including a wholly owned subsidiary, Lucy Lee Hospital, a general acute care hospital located at 2620 North Westwood Boulevard in Poplar Bluff, Missouri.

3. Defendant Poplar Bluff Physicians Group, Inc., doing business as Doctors Regional Medical Center, is a for-profit corporation organized and existing under the laws of the State of Missouri, with its principal place of business at 621 Pine Street, Poplar Bluff, Missouri. Poplar Bluff Physicians Group, Inc., owns and operates Doctors Regional Medical Center ("DRMC"), a general acute care hospital in Poplar Bluff, Missouri.

JURISDICTION AND VENUE

4. Jurisdiction is based on Section 13(b) of the FTC Act, 15 U.S.C. 53(b), and 28 U.S.C. 1337 and 1345. Venue is proper under Section 13(b) of the FTC Act, 15 U.S.C. 53(b), Section 12 of the Clayton Act, 15 U.S.C. 22, and 28 U.S.C. 1391(b) and (c).

5. Under Section 13(b) of the FTC Act, 15 U.S.C. 53(b), the Commission, by its designated attorneys, may seek an injunction in a United States District Court if the Commission has reason to believe a corporation is about to violate any provision of law the Commission enforces and if enjoining the act or actions pending the administrative proceeding would be in the public interest. The district court may grant a preliminary injunction or a temporary restraining order if, weighing the equities and considering the Commission’s likelihood of ultimate success, an injunction would be in the public interest.

6. Tenet and DRMC are engaged in commerce, as "commerce" is defined in Section 1 of the Clayton Act, 15 U.S.C. 12(a). The businesses of Tenet and DRMC have been and are now in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. 44.

7. Tenet and DRMC reside and transact business within the Eastern District of Missouri, Southeastern Division.

THE PROPOSED TRANSACTION AND THE COMMISSION'S RESPONSE

8. On or about April 2, 1997, Tenet signed a letter of intent to acquire all the shares of DRMC and become the owner of all of DRMC’s assets. Tenet agreed to pay $40.5 million dollars in the transaction.

9. Defendants have advised the Commission that, unless otherwise ordered by a court, they will consummate the proposed acquisition at or after 4:00 p.m. CDT, on Monday, April 20, 1998. 10. On April 16, 1998, the Commission authorized the commencement of an action under Section 13(b) of the FTC Act, 15 U.S.C. 53(b), to seek injunctive relief barring the proposed acquisition of DRMC’s stock by Tenet during the pendency of administrative proceedings.

11. In authorizing the commencement of this action, the Commission determined that such relief is in the public interest and that it has reason to believe that the proposed acquisition would violate Section 7 of the Clayton Act, 15 U.S.C. 18, and Section 5 of the FTC Act, 15 U.S.C. 45, because it may substantially lessen competition in the relevant market.

LIKELIHOOD OF SUCCESS ON THE MERITS AND NEED FOR RELIEF

12. The Commission is likely ultimately to succeed in demonstrating, in administrative proceedings to adjudicate the legality of the proposed acquisition, that the acquisition would violate Section 7 of the Clayton Act, 15 U.S.C. 18, and Section 5(a) of the FTC Act, 15 U.S.C. 45(a). In particular, the Commission is likely ultimately to succeed in demonstrating, inter alia, that:

a. All general acute-care inpatient hospital services offered by the parties in Butler County, Missouri, is a relevant product market in which to assess the competitive effects of the proposed acquisition.

b. A relevant geographic market within which to assess the competitive effects of the proposed acquisition, for general acute-care inpatient hospital services, is no larger than Butler County and portions of seven surrounding counties (Clay County, AR; Ripley County, MO; Carter County, MO; Reynolds County, MO; Wayne County, MO; Stoddard County, MO; and Dunklin County, MO).

c. The effect of the proposed acquisition, if consummated, may be substantially to lessen competition in the relevant market by, among other things, eliminating an effective competitor, eliminating substantial actual competition between Tenet’s Lucy Lee Hospital and DRMC, and providing the merged entity with the ability to exercise market power.

13. If Tenet were to acquire DRMC, the reestablishment of Lucy Lee Hospital and DRMC as independent viable competitive entities would be difficult, and there is a substantial likelihood that it would be difficult or impossible to restore the businesses as they originally existed. Furthermore, it is likely that substantial interim harm to competition would occur even if suitable divestiture remedies could be devised.

14. For the reasons stated above, the granting of the injunctive relief sought is in the public interest.

WHEREFORE, the Commission requests that the Court:

  1. Preliminarily enjoin Tenet, and all affiliates of Tenet, from acquiring, directly or indirectly, any stock, assets, or other interests in defendant DRMC, or any affiliates of DRMC, or taking any other steps to consummate the transaction that defendant Tenet proposes in its letter of intent dated April 2, 1997;
  2. Maintain the status quo pending the issuance of an administrative complaint by the Commission challenging such acquisition, and until such complaint is dismissed by the Commission or set aside by a court on review, or until the order of the Commission made thereon has become final; and
  3. Award such other and further relief as the Court may determine to be proper and just, including costs.

Respectfully submitted,

Debra A. Valentine
General Counsel

OFFICE OF THE GENERAL COUNSEL

Robert F. Leibenluft
Assistant Director
Health Care Division

Garry R. Gibbs
Attorney
BUREAU OF COMPETITION

FEDERAL TRADE COMMISSION

By:

Garry R. Gibbs
Trial Counsel for Plaintiff
Federal Trade Commission
6th St. & Pennsylvania Ave., N.W.
Washington, D.C. 20580
(202) 326-2767
(202) 326-3384 (fax)