September 19, 2025 • 47 mins
Herb Allen, Partner, Honigman LLP, speaks with Jeff Oliver, Partner, Baker Botts LLP, about some of the recent developments related to health care antitrust enforcement. They discuss the current team of antitrust enforcers in the Trump Administration, areas where the current administration is continuing the policies of the previous administration (i.e., merger guidelines, HSR form), areas of divergence (i.e., merger remedies, settlements, private equity), and areas of continuity and change regarding non-competes. From AHLA’s Antitrust Practice Group.
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Episode Transcript
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SPEAKER_00 (00:00):
This episode of AHLA's Speaking of Health Law is
brought to you by AHLA membersand donors like you.
For more information, visitamericanhealthlaw.org.
SPEAKER_02 (00:17):
Hello, thanks for joining us on AHLA's Speaking of
Health Law podcast.
My name is Herb Allen.
I am the chair of the AntitrustPractice Group at AHLA and
partner at Honigman inWashington, D.C., and I'm joined
by one of my colleagues in theAHLA Antitrust Practice Group,
(00:39):
Jeff Oliver, who is a partner atBaker Botts and has a lot of
experience in healthcareantitrust law.
So Welcome, Jeff.
Excited to be here and to talkto you about some of the recent
developments under the Trumpadministration in healthcare
antitrust.
SPEAKER_01 (00:56):
Yeah.
Thanks, Herb.
Appreciate the invite to be onthe podcast.
I'm looking forward to thediscussion.
SPEAKER_02 (01:03):
I think we're something like six or seven
months into the newadministration.
And I think we're now startingto see some trends that we can
sort of draw some conclusionsfrom and hopefully give some
advice to our healthcare clientsabout sort of how to interact
(01:25):
with the agencies and what theymight expect when they have a
transaction or some kind of aninvestigation.
So let's just start off, Jeff,with a discussion of who the new
antitrust team is within theTrump administration.
I think one of the reallyinteresting points about this, I
(01:47):
think, is how serious all of theantitrust enforcers are.
They bring, you know, deepexperience at the agencies.
Several of them have stateantitrust enforcement
experience.
FTC Chair Andrew Ferguson wasthe Virginia Solicitor General.
Melissa Holyoake was the UtahSolicitor General and oversaw
(02:09):
antitrust enforcement in thestate of Utah.
So I think, you know, really forfolks that may be you're seeing
podcasters or influencers inother parts of the Trump
administration at a high levelwithin antitrust enforcement,
it's really our serious peoplewho have deep experience.
SPEAKER_01 (02:31):
Yeah, I think that's a great point, Herb.
I mean, particularly, I thinkDOJ, Gail Slater, who's the AAG
over antitrust, I think she, atleast in this round of nominees
for positions in theadministration, Gail had either
the highest or the secondhighest approval when it came to
(02:54):
the vote in the Senate.
She's one who has justundeniable credibility in
antitrust a long background inantitrust, serving on both
sides.
You know, she was an attorneyadvisor to a Democrat
commissioner at the FTC beforeshe became J.D.
(03:14):
Vance's antitrust advisor duringthe election.
And it does seem like the Trumpteam, as they came into office,
put a lot of effort into pickingcredible and, like, you put it
serious candidates for thesepositions.
(03:36):
Yep.
SPEAKER_02 (03:38):
Well, I think the other point about these people
and this came through on GailSlater's confirmation testimony
and just public statements thathave been made since they've
taken office is that all ofthese new enforcers at the FTC
and GOJ are very interested inhealthcare.
(03:59):
And they see that as an areawhere really there should be
robust enforcement.
And I think we're starting tosee that the cases.
Um, but I'll just, you know,just quote chair Ferguson here.
This is something that he said,um, you know, recently is, uh,
he said protecting healthcompetition and healthcare
markets will be one of thehighest priorities of the Trump
(04:21):
Vance FTC.
Um, and, and Gail Slater echoedthat in her confirmation hearing
saying that healthcare is one ofthe industries and sectors that
impact the day-to-day lives ofthe scrutiny, heightened
scrutiny in that area.
SPEAKER_01 (04:45):
Sorry, Herb, just one thought I had on that topic.
I mean, it's still some of thecase, for example, in certain
industries that no No leader oreven politician gets in trouble
when they subject a particularindustry to aggressive scrutiny.
(05:06):
And for a long time, energy hasheld that position where, yeah,
there's maybe a pro-businessslant on one side or the other,
but both sides feel entirelycomfortable calling for
significant scrutiny, just giventhe strategic nature of the
industry.
You've seen that also, a kind ofconsensus around big tech as an
(05:32):
industry that both sides justseem to agree demands close
scrutiny, whether that's rightor wrong, I'll reserve judgment.
But healthcare, I think we cannow say is squarely in that same
bucket where both sides feelentirely liberated in terms of
their constituencies supportingan aggressive approach to
(05:56):
antitrust.
SPEAKER_02 (05:56):
Yeah, totally agree.
And I think we're seeing that inthe cases that they're bringing.
We'll talk about some of those,but a number of them are in
healthcare.
And so, yeah, there'scontinuity, there's
bipartisanship in terms ofwanting to focus on enforcement
(06:18):
in healthcare.
So let's talk about some of theother kinds of continuity that I
think we're seeing betweenbetween the Trump and Biden
administration, which again, maybe surprising to some folks who
would have thought that therewould be just sort of a whole
new approach.
And, you know, Trump has talkedabout wanting to really
deregulate the economy and he'sdismantled agencies, CFPB and
(06:44):
others that, you know, arecharged with, you know,
enforcement.
But again, we're not seeing thatin antitrust.
And in fact, there's kind ofsome really substantial
surprising continuity in termsof policies and regulations that
the Trump team has endorsed.
And let me just talk about thefirst one and we can discuss a
(07:07):
little bit, but it's the Bidenera 2023 merger guidelines.
And so just to give a quickintro on what that is, merger
guidelines are a policy documentthat the agencies promulgate in
order to just really at a veryhigh level describe the analyst
tools that the agencies use whenevaluating mergers under the
(07:31):
antitrust laws.
And the Biden 2023 mergerguidelines, I think, were really
pro-enforcement in a number ofways.
They lowered market sharethresholds for finding
anti-competitive conduct.
So, for example, under the newmerger guidelines, transactions
(07:51):
that result in a 30% share canbe presumed to be antitrust.
And that's a really significantexpansion of what is presumed to
be anti-competitive because Ithink under the prior
guidelines, a 30% share wouldhave been presumed lawful in
most cases, right?
So significant change.
(08:14):
Also, the merger guidelines, thenew merger guidelines tighten up
what you have to show to proveefficiencies.
That's sort of a way to defend amerger by showing that there'll
be sort of pro-competitivebenefits from a transaction.
That's tightened up.
And then there's also a greaterfocus on potential competition
(08:35):
and innovation markets under thenew guidelines.
This was an area where I thoughtmaybe we'd see a withdrawal of
the Biden era guidelines, butnot the case.
And in fact, Ferguson said whenhe took office on X, he posts a
(08:56):
lot on He said on X, he said, byand large, the 2023 merger
guidelines are a restatement ofprior iterations of the
guidelines and a reflection ofwhat can be found in the case
law.
There's good reason to retainthem.
They're not perfect, he says,but if revisions become
necessary, they will considerthem down the road through an
(09:17):
iterative and transparentrevision process.
SPEAKER_01 (09:20):
Yeah.
Yeah, I think it was one of themore interesting dynamics in the
transition from the prioradministration to this one is
this question of where they'regoing to keep these guidelines.
The background on them is thatthe 2023 guidelines were
released in a draft form acouple years ago for comment and
(09:43):
the initial draft form of theguidelines were so aggressive
when it came to applying Section7 of the Clayton Act to mergers
that there was just an almostnuclear response to them from
all sides.
A lot of aggressive-mindedeconomists and advocates found
(10:05):
lots to hate in the guidelines,and there did just seem to be a
severe animus toward deals sortof baked into the draft.
Some of that stayed.
Fortunately, due to thatreaction, the final version, the
temperature came down quite abit, at least rhetorically in
the guidelines.
A lot of more aggressivepostures stayed in, like the 30%
(10:27):
threshold that you mentioned.
It's probably worth mentioningthat the guidelines are not law,
and despite Ferguson's claimthat it's all supported by case
law, that 30% is not supportedby case law.
I can't remember.
I'm sure it's happened, but it'svery rare that a court would
support enforcement actionagainst a deal where the
(10:51):
combined shares end up at 30%.
It's still a very low threshold.
The FTC and Everybody knowsthat.
I don't think I've seen thembring a suit on a transaction at
30%.
Nevertheless, it's still a goodindicator of when they will
issue a second request and whenyou have a long investigation on
your hands.
I'll point out just one exampleof impact and likely influence
(11:13):
of the new guidelines.
Last month, the FTC sued toblock a deal between Edwards and
Geneval.
These are two companies thatmake healthcare devices.
essentially, medical devices, inthis case, particular, quite
complicated and innovativedevices to treat a kind of rare
(11:35):
heart condition.
And neither of the products atissue were actually outside of
clinical trials yet.
They weren't being sold.
They were in R&D phase, testingsomewhat, but still a ways away
from market.
(11:56):
That's notable because it's rarethat the agencies bring a pure
pipeline enforcement actionagainst a deal that is focused
solely on where the antitrustissue is focused solely on a
pure pipeline product, meaning aproduct in development and a
kind of innovation market.
(12:17):
They don't use that word in thecomplaint on this deal,
innovation, but that's what itis.
And the effects are all a aroundkind of what this will do to
future competition that doesn'tquite exist yet because neither
product's being sold.
They're the only two companiesthat are making the product or
at least that have the productin development.
(12:39):
And the relation of that to theguidelines is that this version
of the guidelines spent muchmore time than its predecessors
on this question of how mergersand consolidation can impact the
incentive to innovate.
And they also explicitly callout a pipeline type market where
(13:02):
products that are in developmentcan be the subject of a kind of
narrowly defined product market,which the agency under prior
leadership had somewhat shiedaway from.
There's a very analogous examplein 2004 where two companies who
were also creating medicaldevices Enzyme and Novizyme,
(13:27):
they were up for merger and didend up merging.
But the merger was subject to anextended investigation and an
administration at that point,which was also Republican led,
passed on the deal with somecommentary around lingering
(13:49):
questions about how mergersimpact innovation.
In other words, Tim Muris, whowas leading at the time
indicated that he had somedoubts about whether you can
honestly say consolidationimpacts the incentive to
innovate.
That's a question that thecurrent guidelines put to bed
(14:09):
essentially, or at least sort ofpresent as having been settled
in the affirmative that theconsolidation does negatively
impact the incentive toinnovate.
And I think you could argue thatthis enforcement effort
UNKNOWN (14:25):
Thank you.
SPEAKER_01 (14:26):
on the Edwards-Geneval transaction is a
result of that added sort oftraction on these innovation
market and pipeline marketquestions.
SPEAKER_02 (14:43):
Yeah, I think I agree with all of what you just
said.
I think the other point I wouldmake is that these are hard
cases to win often, and they'rehard because you have to show a
substantial likelihood thatthese products that are still
in, you know, regulatory review,maybe still in clinical trials,
that they're actually going to,that there's a good likelihood
(15:05):
that they would ultimately reachthe market, right?
Yeah.
And so that, you know, thedefendants can point out all the
challenges that are still, youknow, still in the way of
approval and ofcommercialization.
And, you know, enforcers have tomake a strong case that this is
(15:26):
not just sort of hypotheticalproducts that may or may not
actually reach the market, butthey, you know, they really are
likely to do so.
Yeah.
So, yeah.
So I, you know, I would say thisis, you know, this is the Biden,
excuse me, the Trump, the Trumpantitrust team bringing a hard
case.
(15:47):
That's what it looks like to me.
SPEAKER_01 (15:49):
Yeah.
An indication that, again,healthcare, they're willing to
run some risks.
You know, there's, as you sayingsignificant litigation risk in
bringing this type ofenforcement action and a purely
Republican led FTC.
I mean, there are no Democratscurrently on the commission,
(16:10):
although that changes week toweek.
Sometimes we may talk aboutthat, but that the Republicans
unanimously were willing to runthis risk with this enforcement
action.
UNKNOWN (16:24):
Yeah.
SPEAKER_02 (16:25):
Well, let's talk a little about HSR.
So the HSR Act, folks who do M&Adeals will know what that is.
It's a statute that requiresnotification to FTC and DOJ for
transactions that are above acertain size threshold.
(16:46):
That's currently$126.4 million.
So it has to be a sizabletransaction to be reportable
under the HSR Act.
Um and like the process that youdescribed with the merger
guidelines, the HSR rules for anumber of years under the Biden
(17:06):
administration were undergoingkind of draft revisions.
And so what happened at the endof the Biden administration,
really in the closing days, isthat they released new HSR rules
that pretty dramaticallyexpanded the information that
(17:26):
merging parties have to provideto DOJ under the HSR Act.
The agency's own estimate interms of the added burden on
parties is 68 hours ofadditional time per filer, so a
substantial amount of additionalwork.
And especially in deals withoverlaps, which may not be
(17:49):
overlaps in the same market, butif you have an overlap in the
same industry code under thesenew rules, you have to supply a
lot more information about thoseoverlaps about your top
customers, about supplyrelationships, and it really can
be a significant lift, whichwe're seeing with our clients.
But again, this is an area whereI think you might have expected
(18:11):
a Trump FTC and DOJ might havesaid, you know what, guys, this
is more than we need.
The old form worked.
Let's revert back to that.
But we didn't see that.
We didn't see that.
The Trump FTC and DOJ have saidthat they are going to continue
and they are continuing to usethe new form.
(18:32):
Another Ferguson ex-post, whichI'll read really quickly here,
he describes the HSR form, thenew form, with all that it
requires and all the additionalburden, he describes it as long
overdue, explaining that the newrules ensure that parties
provide appropriate informationso law enforcement can fulfill
(18:56):
Congress's mandates and preventunlawful deals from slipping
through the cracks.
So yeah, another area of perhapsunexpected continuity between
Trump and Biden.
SPEAKER_01 (19:10):
Yeah.
Yeah, this one really surprisedme.
I mean, there's explanations, ofcourse, I think to some degree,
the new, well, they weren't newcommissioners at the time, but
under the new leadership in theOval Office, they had sort of
tied their hands because theyhad already pre-election
(19:30):
approved sort of the changeafter significant and heated, I
think, negotiations over whatwould be included in the new HSR
rules.
And I think they had agreed tosign on to the new rules after
Lena Kahn and the Democrats hadagreed to certain compromises on
(19:53):
what the new rules would entail.
And so they were on recordalready having signed up to
support the new rules.
I think it's difficult tooverstate for folks on the line
who have not yet done a filingunder the new HSR rules.
(20:14):
It's difficult to overstate howsignificant the change is and
how much more time it takes.
Under the old rules, if it was afire drill, we could probably
put a filing together in amatter of days two to three
days.
(20:35):
It wasn't ideal, but it could bedone.
You cannot do that anymore andhave a credible filing or a
defensible filing.
The shortest time that we'vebeen able to condense it to is
about 15 days, and that's reallytight.
There's just a lot more dockerview, a lot more thought in
(20:57):
terms of how to describe thedeal and describing what the
deal entails in terms ofcompetitive overlaps, that sort
of thing.
You want to build into yourpurchase agreements and
elsewhere some runway to getthat HSR ready for filing.
Yeah.
SPEAKER_02 (21:16):
I think the point about what's required now in the
narrative response is importantbecause under the prior form,
you did not have toaffirmatively describe in any
great detail the overlap.
You didn't have to describe thecustomer categories, the
different products and servicesand describe them in terms of
(21:39):
what are the categories in whichthe customer views them, you
could file and forget.
We sometimes did that on deals.
You file and forget and if therewere questions, assuming it's
not a really sensitive dealwhere you expected problems, you
could triage those as they camein.
(22:00):
Now all of that is You have tobake that in at the front end.
SPEAKER_01 (22:05):
Yeah, I think that's a really good point and worth
emphasizing.
What we're finding as we getmore experience with the new
rules is that on a strategictransaction, meaning a
transaction in which therelikely is some overlap that you
may need to explain to theagency and explain why it's
innocuous, you need tounderstand what arguments you're
(22:28):
likely to make about thatoverlap, what while you're
filling out the HSR form, whichI think is your point, Herb,
that before you could kind ofthrow your strategy, your
substantive strategy with regardto the deal together at the tail
end and maybe even after youfiled.
(22:48):
Now, because you're having tomake affirmative statements
about those competitive overlapsin the filing and describe it in
not excruciating detail, butsome level of detail, you need
to have your strategy notentirely figured out, but at
least thought through such thatyou're reserving positions and
(23:08):
arguments about the overlap whenyou're just figuring out how to
describe it in the filing.
Yep.
SPEAKER_02 (23:19):
Well, let's talk about change, right?
It hasn't all been continuity.
There's some significantchanges, some of which I think
will be good news to folkslistening to this podcast who
want to get deals done.
And The first one I want to talka little bit about is greater
(23:43):
openness to merger remedies.
And so what is a merger remedy?
I guess there's really two kindsgenerally.
There's behavioral remedieswhere the agencies impose some
specific conditions on thepost-closing behavior of the
merged entity.
But sort of the more common iswhat we call a structural remedy
(24:06):
where the agencies requireusually a divested of some part
of the business or locations orperhaps employees.
And under the Bidenadministration, there was a real
hostility towards mergerremedies writ large.
Jonathan Cantor, who was thehead of the antitrust division
(24:29):
under President Biden, said, I'mconcerned that merger remedies
short of blocking a transactiontoo often miss the mark.
And he He says, in mostsituations, we should seek a
simple injunction to block thetransaction, which is another
way of saying you can't fixdeals that are partially broken.
The preference of enforcersshould be to block the whole
(24:54):
thing, right?
So we saw many fewersettlements, many fewer consent
decrees with divestitures orwith behavioral remedies.
And I think what we're seeingunder the new enforcers is a
much greater openness tosettlements.
And I'll just, before I hand itover to you, Jeff, to give your
thoughts.
(25:15):
Melissa Holyoak recently saidthat the Biden antitrust team
had an unjustified hostilitytowards divestitures.
She expressed hope that the FTCwould return to what she called
normal operations with regard todivestitures.
And she said, where adivestiture can successfully
(25:36):
preserve lost competition fromthe merger, The agency should
consider it and focus on thepotential benefits to innovation
from the remainder of themerger.
So potentially a big changehere.
What are you seeing, Jeff?
SPEAKER_01 (25:54):
Yeah, it's certainly the biggest, I think most
significant change fromadministration to
administration.
If you look historically, evenin the first Trump
administration, and thatadministration was statistically
quite aggressive when it came topolicing and challenging deals.
(26:18):
It was not unusual in thatadministration and prior to see
years in which the agenciescombined signed as many as 20 or
more consent orders.
Just as a point of comparison,under Biden in the last two
years, I think the DOJ signedzero consent orders.
(26:40):
And before that, the agencysigned three or four total, and
often they only did so when thejudge made clear that they were
going to lose at trial.
And they then went back andsaid, okay, let's talk about
remedies.
So we can avoid a total loss.
So it was just almost anon-starter.
(27:02):
And certainly toward the end,you just knew that if you had to
propose a remedy to get a dealthrough, that you were going to
either have to litigate or bewilling to walk away from the
transaction to get thetransaction done.
So to now have the door backswinging again with regard to
remedies is a huge change,particularly for anyone who's
(27:23):
looking at a strategictransaction that may require a
divestiture to get done.
The risk profile on those dealshas gone down significantly
because you will potentiallythen be able to solve the
problem without recourse to asecond opinion, meaning a judge.
You won't be having to convincea judge that your remedy is
(27:45):
justified.
You can do that likely at theagency.
So just in the last threemonths, the FTC and DOJ have
signed upwards of six consentorders.
Significant, again, still not onpace with historical averages,
let's say, but getting there andfar and above what they were
(28:08):
doing under the lastadministration.
Some of those have been inhealthcare, like the United
Health and Medicine transaction,or I'll let you talk about that
one because I represent Unitedin my practice.
But others in include theHewlett Packard Juniper Networks
transaction where they actuallysued in January to block the
(28:31):
deal DOJ did.
And then just a month ago ortwo, they signed a consent order
to resolve the competitiveissues there.
That one's controversial.
We'll talk a bit more about thecontroversy in a minute.
Others include Omnicom and let'ssee, IPG.
(28:51):
That one involved advertisingand was noteworthy because it
was a purely behavioral fix,meaning no divestiture, just
parties agreeing to certainbehavioral restrictions of
things they can and can't do inpractice.
Those are extremely rare and arelikely to stay fairly rare.
Both Republicans and Democratsdisfavor them, but noteworthy
(29:13):
that the Republicans at the FTCwere willing to sign a consent
order that was purelybehavioral.
There's a few others I'll saythe details, but it's the number
of them, and they all came in arush between June and July, was
to this private practicepractitioner quite refreshing
(29:35):
and a relief to see what seemsto me a very reasonable
approach, which is if you have atransaction that has an issue
that's fixable, let's find waysto avoid wasting resources and
time and a lot of money onlitigating when the outcome of
that litigation is is not surefor either side.
(29:57):
Herb, back to you for yourthoughts on it.
SPEAKER_02 (30:01):
Yeah, well, I mean, I think you're right.
This is a sea change.
It is an opportunity for folks,especially in healthcare M&A
deals.
A lot of our deals are dealsthat involve markets all around
the country, and you may have nocompetitive issues in 90% of
those markets, but if there's anoverlap in a couple of places,
(30:25):
boy, wouldn't it be nice to beable to get that deal through
and divest the facilities or theassets in those few markets
where there's an overlap.
So I think healthcare, we've gotsmall markets, often local
markets.
And so you can have a deal thatis largely benign, except we're
in a few places.
(30:45):
And I think it's good to seethat we're in a place where
there's a receptiveness to anapproach that lets you get
through you know, the majorityof the deal.
I'll just say on the, you know,on the Amedisys, UnitedHealth
Amedisys deal, and I won't askyou to comment on this, Jeff,
but, you know, this really was asignificant divestiture.
(31:11):
According to the settlement, theDOJ agreed to allow the deal to
proceed on the condition thatUnitedHealth and Amedisys divest
164 home health and hospicelocations across 19 states.
And I think it was interestingin the press release, you really
see that the DOJ almost braggingabout the fact that they had
(31:32):
gotten this settlement.
And they say that by the numberof facilities, this settlement
would secure the largestdivestiture of outpatient
healthcare services to resolve amerger challenge in history.
So, you know, again, I thinkthis is an agency that, you
know, not just willing to dodivestitures, but, you know,
(31:53):
potentially touting them whenthey go.
get them as part of a mergerinvestigation.
SPEAKER_01 (31:59):
Yeah.
And I think that's aninteresting point and an
important priority at thecurrent DOJ and FTC, which is
one, they want to lookaggressive.
They believe in stringentapplication of the antitrust
laws, I think genuinely.
(32:20):
But they also want to advertisea difference between them and
the prior administration acrossthe board, across virtually
every aspect of government,particularly in antitrust, I
think because the prioradministration was so
aggressive.
I was at a talk yesterday whereGail Slater started the talk by
(32:44):
saying that she sees antitrustat a significant inflection
point.
Now, her saying that doesn'tmean it's necessarily true, but
it does show that she wantseveryone to believe that and I
think the way that that they'vesettled on in in manifesting or
(33:05):
kind of marketing theirdifference from the Biden
administration is in theirwillingness largely in their
willingness to consider remediesand it's the easiest way in
which they can check both thoseboxes they can they can brag
about you know the pound offlesh they got out of the
merging parties and that's a winfor the agency they can look to
(33:25):
And on the flip side, they canalso say, look, we're
pro-business.
We're working with these partiesto transactions.
We want to see them grow.
We want to see them achievetheir strategic initiatives.
But we want to see it done in away that's legal.
And we're here to enforce thelaw.
(33:46):
So I think you can expectanyone, again, listening who's
looking at strategictransactions, I think you can
consider those with a stronghope of there at least being a
fix available if you need one.
SPEAKER_02 (34:03):
I'll just add one other area where we're seeing
less hostility is in the way theenforcers view private equity.
So private equity at the end ofthe Biden administration came
under really a lot of attack,right?
And not just because of conductin a couple of specific cases.
(34:26):
But what the agency said is thatthis business model, the private
equity business model hasincentives to do things that may
lead to problems, marketproblems, competition problems.
And I'll quote Lena Kahn here.
She spoke at a workshop onprivate equity and healthcare
(34:46):
very harshly.
She was very critical of theprivate equity industry.
She said, short-term, high risk,low consequence ownership by
private equity can encourage aflip and strip approach.
And she also talks aboutroll-ups, private equity
roll-ups, where private equityfirms acquire lots of small
(35:11):
participants in a market andsort of through those small
acquisitions get market powerover time.
And we saw cases being broughtwith a lot of anti-private
equity rhetoric.
But now I think we're in adifferent world, right?
I think Ferguson, Chair Fergusonhas said very clearly that
(35:32):
there's no reason for thecommission, for the FTC to
single out private equity forspecial treatment.
The Welsh Carson case, Jeff,that you're familiar with, which
is the anesthesia case,allegations that Welsh Carson, a
private equity owner of anational anesthesia practice
(35:53):
that they monopolize theanesthesia markets.
According to Chair Ferguson,that case was just an ordinary
application of Section 7 of theantitrust merger law that
applies to serial acquisitions.
And he says no reason to singleout private equity.
So I just add, I think that'sanother area where, you know,
(36:15):
folks who may be doing privateequity investment in healthcare,
you know, less likely thatyou're going to see the sort of
thumb on the scale against yourdeal just because the owners
happen to be private equityinvestors.
SPEAKER_01 (36:30):
Yeah.
Yeah, I think that's a goodpoint.
And certainly one that will bewarmly received, I'm sure, by
private equity folks inhealthcare who it seems, you
know, private equity itself isgoing through a tough time just
in terms of returns oninvestment and that sort of
thing.
And so this for them is somerelief, I think, at least
(36:53):
they're not being demonized tothe extent they were under the
prior administration.
Another quick thought on changesand trends and things to think
about.
I mentioned earlier about theHewlett Packard, Juniper deal
being somewhat controversial.
I'll just talk a little bitabout what happened there,
fallout, what people shouldthink about.
(37:17):
The point of contention orcontroversy there had to do with
the parties, I think in thiscase, Hewlett Packard's use of
lobbyists, Trump-alignedlobbyists and advocates who
appeared to have essentiallygone over staff's head and made
their case either to the DOJfront office, Pam Bondi's
(37:38):
office, or maybe even all theway to the White House.
And it's all sort of rumor andinnuendo with some statements
from affected officials, but itdoes seem apparent that that
lobbying effort had an impact onthe outcome of that case.
It certainly had an impact on afew DOJ authorities who were
(38:00):
fired due to insubordination andthe going theory, I think fairly
credible, is that thoseindividuals were opposed to the
settlement that the DOJultimately reached with the
parties and tried to block itusing whatever leverage they
could, which proved to beinsufficient, and then they were
(38:22):
fired.
So that's an important thing tokeep in mind for any party who's
considering that route of sortof like a who you know approach
to antitrust as opposed toleveraging facts and advocacy.
Obviously, I'm biased here.
(38:42):
I'm a lawyer, not a lobbyist.
And for a long time, I worriedthat AI would be taking my job,
but maybe it's the lobbyiststhat are going to take my job.
I doubt that, honestly.
And just a word of caution onthat approach.
I can't deny that it can beeffective and maybe particularly
so in this administration.
(39:04):
It is always consequential,though, for the parties who take
that approach.
Once you go above staff's head,and particularly if you go above
the divisions, the antitrustdivisions head at the DOJ
particularly, there's going tobe significant fallout as there
was here because, you know, Armsare going to get twisted at the
(39:24):
agency.
People are going to be put inextremely uncomfortable
positions.
And some, as happened here, maylose their jobs.
That leaves a very sour tasteamong the DOJ staffers.
And your brand then at the DOJtakes a pretty significant hit.
So if you're a repeat player atthe agency, it's worth thinking
(39:47):
hard about whether or not youwant to pursue a kind of
lobbying approach to gettingyour deal done.
done, it may be effective and itmay be the right choice, but it
does not come without risk, Iwould say.
And I welcome your thoughts onthis, Ferb.
SPEAKER_02 (40:05):
Yeah, I mean, it certainly feels like this was
sort of the nuclear option inthis particular transaction
where staff had already reacheda decision about where they
wanted to go, and that was tolitigation.
And the higher-ups at DOJ wereworking with lobbyists sort of
(40:26):
came over the top and basicallyinstructed them to take a
different approach.
I do think when you do thelobbying probably makes a
difference, right?
I mean, if you're sort ofwaiting till the very end after
staff has reached their decisionand you're really trying to get
the senior most folks at theJustice Department to reverse
(40:49):
something that has already beendecided by staff, that may be a
more maybe a more challengingapproach or a more aggressive
way to go about it than tryingto influence things earlier on.
And I wonder if they did dothat.
I
SPEAKER_01 (41:06):
think that's a good point, actually.
Earlier is better in terms ofavoiding the fallout that you
saw here.
As I said earlier, DOJ hadalready sued in January to block
the deal.
And so you're talking six monthslater than when you're already
in front of a judge saying,essentially, you know, there's,
and you have staff who'sextremely committed to whatever
(41:28):
theory they're pushing in frontof the judge and the whole, the
whole division.
And I trust the vision at theagency, obviously now having
leveraged all their resourcesinto a litigation posture.
There's no way there's, there'sno quick route out of that
without, you know, significantdisagreement at the, at the
(41:49):
division level.
And so earlier, I think, I thinkyou're right, Herb, an earlier
approach to advocacy where youmay be able to avoid all of that
division fallout would bebetter.
SPEAKER_02 (42:02):
Yeah.
Should we just quickly go overthe non-compete developments?
We've had a bunch of them in thelast month.
And early September, the FTCwithdrew its defense of the
national non-compete ban thatwas the rule that was
promulgated under the Bidenadministration which means that
(42:25):
that national non-compete ban isbasically dead.
But at the same time, we havethe FTC chairman coming out and
saying, Chair Ferguson sayingthat we're going to continue to
aggressively enforce theantitrust laws against
non-competes.
And in fact, last week, ChairFerguson issued warning letters,
(42:50):
pretty strongly worded warningletters to large healthcare
companies.
And again, this is specific tohealthcare.
Interesting that Fergusondecided to do this in
healthcare.
I think it shows the focus onhealthcare.
But what he said is, availableinformation suggests that many
healthcare employers andstaffing companies include
(43:11):
non-competes that mayunreasonably limit employment
options for vital roles likenurses, physicians, and other
medical professionals.
And he calls on healthcare onhealthcare companies to do a
comprehensive, careful review oftheir non-competes to make sure
that they're not overbroad.
And I'll say one more thing.
(43:34):
It seems like he's especiallyworried about non-competes in
rural markets.
His letter specifically mentionsconcern in areas where there may
already be a shortage ofproviders of healthcare
professionals.
So interesting developmentsthere.
SPEAKER_01 (43:52):
Yeah, definitely interesting.
And particularly as it comes onthe heels of them sort of
declining to defend thenon-compete rule that the Pire
administration had put in placeand then was challenged in
court.
And so there's a bit of aconflicting message there.
How much do they care aboutnon-competes?
(44:14):
But it's clear, at least inhealth care, that they still
care quite a bit.
And health care companies wearnon-competes.
Non-competes are important andsometimes really quite essential
to investing in a new market orbuilding out a new product and
practice.
There's no doubt that anon-compete allows you to make
(44:38):
an investment with a little bitless risk that it's going to be
poached from a competitor whenthey hire your talent.
This is not to say thatnon-competes cannot exist.
the boundaries and sort ofborders of what's allowable are
a bit hazy at the moment, youknow, but, but they, a
(45:02):
non-compete, there is no blanketban on non-competes anymore.
There, you know, that, that wasa rule that was instituted by
the Biden administration.
And then, like I said,challenged in court, that
blanket ban has gone away.
But the concern about the effectof non-competes has not.
And so it's worth thinking partabout what do you need?
(45:25):
What do you feel comfortablewith in a non-compete?
And is there a way to dial, ifyou have a lot of them, to dial
them back in a way that reducesyour risk of an extended
investigation at the agency?
SPEAKER_02 (45:40):
Yeah, I think in terms of what the substantive
law is that will be appliedhere, this morning letter does
not actually contain any newlaw.
It doesn't contain any newstatement of when enforcement
will happen.
There was a recent enforcementinvolving the pet cremation
business where there were somevery broad non-competes,
(46:02):
national in scope, applied toall of the employees of the sort
of dominant company in the petcremation space.
So I think that's an example ofwhere you can expect to see
scrutiny, right?
If your non-competes apply toeverybody, to the janitor, up to
the CEO and they're national inscope and they last for a year,
(46:24):
that may be something that isoverbroad.
But I think we're going to haveto continue to see what the
agencies do in terms of beingable to give more specific
advice.
SPEAKER_01 (46:36):
Yeah, I
SPEAKER_02 (46:36):
agree.
Well, thanks everybody forjoining us.
Really appreciate Jeff forjoining me.
We had a good discussion andwe'll all stay tuned to more to
come.
I think we're just seeing thefirst inklings of what this is
all going to look like goingforward.
Thank you, Jeff.
SPEAKER_01 (46:55):
Yeah, my pleasure.
Thank you, Herb.
Have a good one.
SPEAKER_00 (47:03):
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SPEAKER_02 (00:17):
Hello, thanks for joining us on AHLA's Speaking of
Health Law podcast.
My name is Herb Allen.
I am the chair of the AntitrustPractice Group at AHLA and
partner at Honigman inWashington, D.C., and I'm joined
by one of my colleagues in theAHLA Antitrust Practice Group,
(00:39):
Jeff Oliver, who is a partner atBaker Botts and has a lot of
experience in healthcareantitrust law.
So Welcome, Jeff.
Excited to be here and to talkto you about some of the recent
developments under the Trumpadministration in healthcare
antitrust.
SPEAKER_01 (00:56):
Yeah.
Thanks, Herb.
Appreciate the invite to be onthe podcast.
I'm looking forward to thediscussion.
SPEAKER_02 (01:03):
I think we're something like six or seven
months into the newadministration.
And I think we're now startingto see some trends that we can
sort of draw some conclusionsfrom and hopefully give some
advice to our healthcare clientsabout sort of how to interact
(01:25):
with the agencies and what theymight expect when they have a
transaction or some kind of aninvestigation.
So let's just start off, Jeff,with a discussion of who the new
antitrust team is within theTrump administration.
I think one of the reallyinteresting points about this, I
(01:47):
think, is how serious all of theantitrust enforcers are.
They bring, you know, deepexperience at the agencies.
Several of them have stateantitrust enforcement
experience.
FTC Chair Andrew Ferguson wasthe Virginia Solicitor General.
Melissa Holyoake was the UtahSolicitor General and oversaw
(02:09):
antitrust enforcement in thestate of Utah.
So I think, you know, really forfolks that may be you're seeing
podcasters or influencers inother parts of the Trump
administration at a high levelwithin antitrust enforcement,
it's really our serious peoplewho have deep experience.
SPEAKER_01 (02:31):
Yeah, I think that's a great point, Herb.
I mean, particularly, I thinkDOJ, Gail Slater, who's the AAG
over antitrust, I think she, atleast in this round of nominees
for positions in theadministration, Gail had either
the highest or the secondhighest approval when it came to
(02:54):
the vote in the Senate.
She's one who has justundeniable credibility in
antitrust a long background inantitrust, serving on both
sides.
You know, she was an attorneyadvisor to a Democrat
commissioner at the FTC beforeshe became J.D.
(03:14):
Vance's antitrust advisor duringthe election.
And it does seem like the Trumpteam, as they came into office,
put a lot of effort into pickingcredible and, like, you put it
serious candidates for thesepositions.
(03:36):
Yep.
SPEAKER_02 (03:38):
Well, I think the other point about these people
and this came through on GailSlater's confirmation testimony
and just public statements thathave been made since they've
taken office is that all ofthese new enforcers at the FTC
and GOJ are very interested inhealthcare.
(03:59):
And they see that as an areawhere really there should be
robust enforcement.
And I think we're starting tosee that the cases.
Um, but I'll just, you know,just quote chair Ferguson here.
This is something that he said,um, you know, recently is, uh,
he said protecting healthcompetition and healthcare
markets will be one of thehighest priorities of the Trump
(04:21):
Vance FTC.
Um, and, and Gail Slater echoedthat in her confirmation hearing
saying that healthcare is one ofthe industries and sectors that
impact the day-to-day lives ofthe scrutiny, heightened
scrutiny in that area.
SPEAKER_01 (04:45):
Sorry, Herb, just one thought I had on that topic.
I mean, it's still some of thecase, for example, in certain
industries that no No leader oreven politician gets in trouble
when they subject a particularindustry to aggressive scrutiny.
(05:06):
And for a long time, energy hasheld that position where, yeah,
there's maybe a pro-businessslant on one side or the other,
but both sides feel entirelycomfortable calling for
significant scrutiny, just giventhe strategic nature of the
industry.
You've seen that also, a kind ofconsensus around big tech as an
(05:32):
industry that both sides justseem to agree demands close
scrutiny, whether that's rightor wrong, I'll reserve judgment.
But healthcare, I think we cannow say is squarely in that same
bucket where both sides feelentirely liberated in terms of
their constituencies supportingan aggressive approach to
(05:56):
antitrust.
SPEAKER_02 (05:56):
Yeah, totally agree.
And I think we're seeing that inthe cases that they're bringing.
We'll talk about some of those,but a number of them are in
healthcare.
And so, yeah, there'scontinuity, there's
bipartisanship in terms ofwanting to focus on enforcement
(06:18):
in healthcare.
So let's talk about some of theother kinds of continuity that I
think we're seeing betweenbetween the Trump and Biden
administration, which again, maybe surprising to some folks who
would have thought that therewould be just sort of a whole
new approach.
And, you know, Trump has talkedabout wanting to really
deregulate the economy and he'sdismantled agencies, CFPB and
(06:44):
others that, you know, arecharged with, you know,
enforcement.
But again, we're not seeing thatin antitrust.
And in fact, there's kind ofsome really substantial
surprising continuity in termsof policies and regulations that
the Trump team has endorsed.
And let me just talk about thefirst one and we can discuss a
(07:07):
little bit, but it's the Bidenera 2023 merger guidelines.
And so just to give a quickintro on what that is, merger
guidelines are a policy documentthat the agencies promulgate in
order to just really at a veryhigh level describe the analyst
tools that the agencies use whenevaluating mergers under the
(07:31):
antitrust laws.
And the Biden 2023 mergerguidelines, I think, were really
pro-enforcement in a number ofways.
They lowered market sharethresholds for finding
anti-competitive conduct.
So, for example, under the newmerger guidelines, transactions
(07:51):
that result in a 30% share canbe presumed to be antitrust.
And that's a really significantexpansion of what is presumed to
be anti-competitive because Ithink under the prior
guidelines, a 30% share wouldhave been presumed lawful in
most cases, right?
So significant change.
(08:14):
Also, the merger guidelines, thenew merger guidelines tighten up
what you have to show to proveefficiencies.
That's sort of a way to defend amerger by showing that there'll
be sort of pro-competitivebenefits from a transaction.
That's tightened up.
And then there's also a greaterfocus on potential competition
(08:35):
and innovation markets under thenew guidelines.
This was an area where I thoughtmaybe we'd see a withdrawal of
the Biden era guidelines, butnot the case.
And in fact, Ferguson said whenhe took office on X, he posts a
(08:56):
lot on He said on X, he said, byand large, the 2023 merger
guidelines are a restatement ofprior iterations of the
guidelines and a reflection ofwhat can be found in the case
law.
There's good reason to retainthem.
They're not perfect, he says,but if revisions become
necessary, they will considerthem down the road through an
(09:17):
iterative and transparentrevision process.
SPEAKER_01 (09:20):
Yeah.
Yeah, I think it was one of themore interesting dynamics in the
transition from the prioradministration to this one is
this question of where they'regoing to keep these guidelines.
The background on them is thatthe 2023 guidelines were
released in a draft form acouple years ago for comment and
(09:43):
the initial draft form of theguidelines were so aggressive
when it came to applying Section7 of the Clayton Act to mergers
that there was just an almostnuclear response to them from
all sides.
A lot of aggressive-mindedeconomists and advocates found
(10:05):
lots to hate in the guidelines,and there did just seem to be a
severe animus toward deals sortof baked into the draft.
Some of that stayed.
Fortunately, due to thatreaction, the final version, the
temperature came down quite abit, at least rhetorically in
the guidelines.
A lot of more aggressivepostures stayed in, like the 30%
(10:27):
threshold that you mentioned.
It's probably worth mentioningthat the guidelines are not law,
and despite Ferguson's claimthat it's all supported by case
law, that 30% is not supportedby case law.
I can't remember.
I'm sure it's happened, but it'svery rare that a court would
support enforcement actionagainst a deal where the
(10:51):
combined shares end up at 30%.
It's still a very low threshold.
The FTC and Everybody knowsthat.
I don't think I've seen thembring a suit on a transaction at
30%.
Nevertheless, it's still a goodindicator of when they will
issue a second request and whenyou have a long investigation on
your hands.
I'll point out just one exampleof impact and likely influence
(11:13):
of the new guidelines.
Last month, the FTC sued toblock a deal between Edwards and
Geneval.
These are two companies thatmake healthcare devices.
essentially, medical devices, inthis case, particular, quite
complicated and innovativedevices to treat a kind of rare
(11:35):
heart condition.
And neither of the products atissue were actually outside of
clinical trials yet.
They weren't being sold.
They were in R&D phase, testingsomewhat, but still a ways away
from market.
(11:56):
That's notable because it's rarethat the agencies bring a pure
pipeline enforcement actionagainst a deal that is focused
solely on where the antitrustissue is focused solely on a
pure pipeline product, meaning aproduct in development and a
kind of innovation market.
(12:17):
They don't use that word in thecomplaint on this deal,
innovation, but that's what itis.
And the effects are all a aroundkind of what this will do to
future competition that doesn'tquite exist yet because neither
product's being sold.
They're the only two companiesthat are making the product or
at least that have the productin development.
(12:39):
And the relation of that to theguidelines is that this version
of the guidelines spent muchmore time than its predecessors
on this question of how mergersand consolidation can impact the
incentive to innovate.
And they also explicitly callout a pipeline type market where
(13:02):
products that are in developmentcan be the subject of a kind of
narrowly defined product market,which the agency under prior
leadership had somewhat shiedaway from.
There's a very analogous examplein 2004 where two companies who
were also creating medicaldevices Enzyme and Novizyme,
(13:27):
they were up for merger and didend up merging.
But the merger was subject to anextended investigation and an
administration at that point,which was also Republican led,
passed on the deal with somecommentary around lingering
(13:49):
questions about how mergersimpact innovation.
In other words, Tim Muris, whowas leading at the time
indicated that he had somedoubts about whether you can
honestly say consolidationimpacts the incentive to
innovate.
That's a question that thecurrent guidelines put to bed
(14:09):
essentially, or at least sort ofpresent as having been settled
in the affirmative that theconsolidation does negatively
impact the incentive toinnovate.
And I think you could argue thatthis enforcement effort
UNKNOWN (14:25):
Thank you.
SPEAKER_01 (14:26):
on the Edwards-Geneval transaction is a
result of that added sort oftraction on these innovation
market and pipeline marketquestions.
SPEAKER_02 (14:43):
Yeah, I think I agree with all of what you just
said.
I think the other point I wouldmake is that these are hard
cases to win often, and they'rehard because you have to show a
substantial likelihood thatthese products that are still
in, you know, regulatory review,maybe still in clinical trials,
that they're actually going to,that there's a good likelihood
(15:05):
that they would ultimately reachthe market, right?
Yeah.
And so that, you know, thedefendants can point out all the
challenges that are still, youknow, still in the way of
approval and ofcommercialization.
And, you know, enforcers have tomake a strong case that this is
(15:26):
not just sort of hypotheticalproducts that may or may not
actually reach the market, butthey, you know, they really are
likely to do so.
Yeah.
So, yeah.
So I, you know, I would say thisis, you know, this is the Biden,
excuse me, the Trump, the Trumpantitrust team bringing a hard
case.
(15:47):
That's what it looks like to me.
SPEAKER_01 (15:49):
Yeah.
An indication that, again,healthcare, they're willing to
run some risks.
You know, there's, as you sayingsignificant litigation risk in
bringing this type ofenforcement action and a purely
Republican led FTC.
I mean, there are no Democratscurrently on the commission,
(16:10):
although that changes week toweek.
Sometimes we may talk aboutthat, but that the Republicans
unanimously were willing to runthis risk with this enforcement
action.
UNKNOWN (16:24):
Yeah.
SPEAKER_02 (16:25):
Well, let's talk a little about HSR.
So the HSR Act, folks who do M&Adeals will know what that is.
It's a statute that requiresnotification to FTC and DOJ for
transactions that are above acertain size threshold.
(16:46):
That's currently$126.4 million.
So it has to be a sizabletransaction to be reportable
under the HSR Act.
Um and like the process that youdescribed with the merger
guidelines, the HSR rules for anumber of years under the Biden
(17:06):
administration were undergoingkind of draft revisions.
And so what happened at the endof the Biden administration,
really in the closing days, isthat they released new HSR rules
that pretty dramaticallyexpanded the information that
(17:26):
merging parties have to provideto DOJ under the HSR Act.
The agency's own estimate interms of the added burden on
parties is 68 hours ofadditional time per filer, so a
substantial amount of additionalwork.
And especially in deals withoverlaps, which may not be
(17:49):
overlaps in the same market, butif you have an overlap in the
same industry code under thesenew rules, you have to supply a
lot more information about thoseoverlaps about your top
customers, about supplyrelationships, and it really can
be a significant lift, whichwe're seeing with our clients.
But again, this is an area whereI think you might have expected
(18:11):
a Trump FTC and DOJ might havesaid, you know what, guys, this
is more than we need.
The old form worked.
Let's revert back to that.
But we didn't see that.
We didn't see that.
The Trump FTC and DOJ have saidthat they are going to continue
and they are continuing to usethe new form.
(18:32):
Another Ferguson ex-post, whichI'll read really quickly here,
he describes the HSR form, thenew form, with all that it
requires and all the additionalburden, he describes it as long
overdue, explaining that the newrules ensure that parties
provide appropriate informationso law enforcement can fulfill
(18:56):
Congress's mandates and preventunlawful deals from slipping
through the cracks.
So yeah, another area of perhapsunexpected continuity between
Trump and Biden.
SPEAKER_01 (19:10):
Yeah.
Yeah, this one really surprisedme.
I mean, there's explanations, ofcourse, I think to some degree,
the new, well, they weren't newcommissioners at the time, but
under the new leadership in theOval Office, they had sort of
tied their hands because theyhad already pre-election
(19:30):
approved sort of the changeafter significant and heated, I
think, negotiations over whatwould be included in the new HSR
rules.
And I think they had agreed tosign on to the new rules after
Lena Kahn and the Democrats hadagreed to certain compromises on
(19:53):
what the new rules would entail.
And so they were on recordalready having signed up to
support the new rules.
I think it's difficult tooverstate for folks on the line
who have not yet done a filingunder the new HSR rules.
(20:14):
It's difficult to overstate howsignificant the change is and
how much more time it takes.
Under the old rules, if it was afire drill, we could probably
put a filing together in amatter of days two to three
days.
(20:35):
It wasn't ideal, but it could bedone.
You cannot do that anymore andhave a credible filing or a
defensible filing.
The shortest time that we'vebeen able to condense it to is
about 15 days, and that's reallytight.
There's just a lot more dockerview, a lot more thought in
(20:57):
terms of how to describe thedeal and describing what the
deal entails in terms ofcompetitive overlaps, that sort
of thing.
You want to build into yourpurchase agreements and
elsewhere some runway to getthat HSR ready for filing.
Yeah.
SPEAKER_02 (21:16):
I think the point about what's required now in the
narrative response is importantbecause under the prior form,
you did not have toaffirmatively describe in any
great detail the overlap.
You didn't have to describe thecustomer categories, the
different products and servicesand describe them in terms of
(21:39):
what are the categories in whichthe customer views them, you
could file and forget.
We sometimes did that on deals.
You file and forget and if therewere questions, assuming it's
not a really sensitive dealwhere you expected problems, you
could triage those as they camein.
(22:00):
Now all of that is You have tobake that in at the front end.
SPEAKER_01 (22:05):
Yeah, I think that's a really good point and worth
emphasizing.
What we're finding as we getmore experience with the new
rules is that on a strategictransaction, meaning a
transaction in which therelikely is some overlap that you
may need to explain to theagency and explain why it's
innocuous, you need tounderstand what arguments you're
(22:28):
likely to make about thatoverlap, what while you're
filling out the HSR form, whichI think is your point, Herb,
that before you could kind ofthrow your strategy, your
substantive strategy with regardto the deal together at the tail
end and maybe even after youfiled.
(22:48):
Now, because you're having tomake affirmative statements
about those competitive overlapsin the filing and describe it in
not excruciating detail, butsome level of detail, you need
to have your strategy notentirely figured out, but at
least thought through such thatyou're reserving positions and
(23:08):
arguments about the overlap whenyou're just figuring out how to
describe it in the filing.
Yep.
SPEAKER_02 (23:19):
Well, let's talk about change, right?
It hasn't all been continuity.
There's some significantchanges, some of which I think
will be good news to folkslistening to this podcast who
want to get deals done.
And The first one I want to talka little bit about is greater
(23:43):
openness to merger remedies.
And so what is a merger remedy?
I guess there's really two kindsgenerally.
There's behavioral remedieswhere the agencies impose some
specific conditions on thepost-closing behavior of the
merged entity.
But sort of the more common iswhat we call a structural remedy
(24:06):
where the agencies requireusually a divested of some part
of the business or locations orperhaps employees.
And under the Bidenadministration, there was a real
hostility towards mergerremedies writ large.
Jonathan Cantor, who was thehead of the antitrust division
(24:29):
under President Biden, said, I'mconcerned that merger remedies
short of blocking a transactiontoo often miss the mark.
And he He says, in mostsituations, we should seek a
simple injunction to block thetransaction, which is another
way of saying you can't fixdeals that are partially broken.
The preference of enforcersshould be to block the whole
(24:54):
thing, right?
So we saw many fewersettlements, many fewer consent
decrees with divestitures orwith behavioral remedies.
And I think what we're seeingunder the new enforcers is a
much greater openness tosettlements.
And I'll just, before I hand itover to you, Jeff, to give your
thoughts.
(25:15):
Melissa Holyoak recently saidthat the Biden antitrust team
had an unjustified hostilitytowards divestitures.
She expressed hope that the FTCwould return to what she called
normal operations with regard todivestitures.
And she said, where adivestiture can successfully
(25:36):
preserve lost competition fromthe merger, The agency should
consider it and focus on thepotential benefits to innovation
from the remainder of themerger.
So potentially a big changehere.
What are you seeing, Jeff?
SPEAKER_01 (25:54):
Yeah, it's certainly the biggest, I think most
significant change fromadministration to
administration.
If you look historically, evenin the first Trump
administration, and thatadministration was statistically
quite aggressive when it came topolicing and challenging deals.
(26:18):
It was not unusual in thatadministration and prior to see
years in which the agenciescombined signed as many as 20 or
more consent orders.
Just as a point of comparison,under Biden in the last two
years, I think the DOJ signedzero consent orders.
(26:40):
And before that, the agencysigned three or four total, and
often they only did so when thejudge made clear that they were
going to lose at trial.
And they then went back andsaid, okay, let's talk about
remedies.
So we can avoid a total loss.
So it was just almost anon-starter.
(27:02):
And certainly toward the end,you just knew that if you had to
propose a remedy to get a dealthrough, that you were going to
either have to litigate or bewilling to walk away from the
transaction to get thetransaction done.
So to now have the door backswinging again with regard to
remedies is a huge change,particularly for anyone who's
(27:23):
looking at a strategictransaction that may require a
divestiture to get done.
The risk profile on those dealshas gone down significantly
because you will potentiallythen be able to solve the
problem without recourse to asecond opinion, meaning a judge.
You won't be having to convincea judge that your remedy is
(27:45):
justified.
You can do that likely at theagency.
So just in the last threemonths, the FTC and DOJ have
signed upwards of six consentorders.
Significant, again, still not onpace with historical averages,
let's say, but getting there andfar and above what they were
(28:08):
doing under the lastadministration.
Some of those have been inhealthcare, like the United
Health and Medicine transaction,or I'll let you talk about that
one because I represent Unitedin my practice.
But others in include theHewlett Packard Juniper Networks
transaction where they actuallysued in January to block the
(28:31):
deal DOJ did.
And then just a month ago ortwo, they signed a consent order
to resolve the competitiveissues there.
That one's controversial.
We'll talk a bit more about thecontroversy in a minute.
Others include Omnicom and let'ssee, IPG.
(28:51):
That one involved advertisingand was noteworthy because it
was a purely behavioral fix,meaning no divestiture, just
parties agreeing to certainbehavioral restrictions of
things they can and can't do inpractice.
Those are extremely rare and arelikely to stay fairly rare.
Both Republicans and Democratsdisfavor them, but noteworthy
(29:13):
that the Republicans at the FTCwere willing to sign a consent
order that was purelybehavioral.
There's a few others I'll saythe details, but it's the number
of them, and they all came in arush between June and July, was
to this private practicepractitioner quite refreshing
(29:35):
and a relief to see what seemsto me a very reasonable
approach, which is if you have atransaction that has an issue
that's fixable, let's find waysto avoid wasting resources and
time and a lot of money onlitigating when the outcome of
that litigation is is not surefor either side.
(29:57):
Herb, back to you for yourthoughts on it.
SPEAKER_02 (30:01):
Yeah, well, I mean, I think you're right.
This is a sea change.
It is an opportunity for folks,especially in healthcare M&A
deals.
A lot of our deals are dealsthat involve markets all around
the country, and you may have nocompetitive issues in 90% of
those markets, but if there's anoverlap in a couple of places,
(30:25):
boy, wouldn't it be nice to beable to get that deal through
and divest the facilities or theassets in those few markets
where there's an overlap.
So I think healthcare, we've gotsmall markets, often local
markets.
And so you can have a deal thatis largely benign, except we're
in a few places.
(30:45):
And I think it's good to seethat we're in a place where
there's a receptiveness to anapproach that lets you get
through you know, the majorityof the deal.
I'll just say on the, you know,on the Amedisys, UnitedHealth
Amedisys deal, and I won't askyou to comment on this, Jeff,
but, you know, this really was asignificant divestiture.
(31:11):
According to the settlement, theDOJ agreed to allow the deal to
proceed on the condition thatUnitedHealth and Amedisys divest
164 home health and hospicelocations across 19 states.
And I think it was interestingin the press release, you really
see that the DOJ almost braggingabout the fact that they had
(31:32):
gotten this settlement.
And they say that by the numberof facilities, this settlement
would secure the largestdivestiture of outpatient
healthcare services to resolve amerger challenge in history.
So, you know, again, I thinkthis is an agency that, you
know, not just willing to dodivestitures, but, you know,
(31:53):
potentially touting them whenthey go.
get them as part of a mergerinvestigation.
SPEAKER_01 (31:59):
Yeah.
And I think that's aninteresting point and an
important priority at thecurrent DOJ and FTC, which is
one, they want to lookaggressive.
They believe in stringentapplication of the antitrust
laws, I think genuinely.
(32:20):
But they also want to advertisea difference between them and
the prior administration acrossthe board, across virtually
every aspect of government,particularly in antitrust, I
think because the prioradministration was so
aggressive.
I was at a talk yesterday whereGail Slater started the talk by
(32:44):
saying that she sees antitrustat a significant inflection
point.
Now, her saying that doesn'tmean it's necessarily true, but
it does show that she wantseveryone to believe that and I
think the way that that they'vesettled on in in manifesting or
(33:05):
kind of marketing theirdifference from the Biden
administration is in theirwillingness largely in their
willingness to consider remediesand it's the easiest way in
which they can check both thoseboxes they can they can brag
about you know the pound offlesh they got out of the
merging parties and that's a winfor the agency they can look to
(33:25):
And on the flip side, they canalso say, look, we're
pro-business.
We're working with these partiesto transactions.
We want to see them grow.
We want to see them achievetheir strategic initiatives.
But we want to see it done in away that's legal.
And we're here to enforce thelaw.
(33:46):
So I think you can expectanyone, again, listening who's
looking at strategictransactions, I think you can
consider those with a stronghope of there at least being a
fix available if you need one.
SPEAKER_02 (34:03):
I'll just add one other area where we're seeing
less hostility is in the way theenforcers view private equity.
So private equity at the end ofthe Biden administration came
under really a lot of attack,right?
And not just because of conductin a couple of specific cases.
(34:26):
But what the agency said is thatthis business model, the private
equity business model hasincentives to do things that may
lead to problems, marketproblems, competition problems.
And I'll quote Lena Kahn here.
She spoke at a workshop onprivate equity and healthcare
(34:46):
very harshly.
She was very critical of theprivate equity industry.
She said, short-term, high risk,low consequence ownership by
private equity can encourage aflip and strip approach.
And she also talks aboutroll-ups, private equity
roll-ups, where private equityfirms acquire lots of small
(35:11):
participants in a market andsort of through those small
acquisitions get market powerover time.
And we saw cases being broughtwith a lot of anti-private
equity rhetoric.
But now I think we're in adifferent world, right?
I think Ferguson, Chair Fergusonhas said very clearly that
(35:32):
there's no reason for thecommission, for the FTC to
single out private equity forspecial treatment.
The Welsh Carson case, Jeff,that you're familiar with, which
is the anesthesia case,allegations that Welsh Carson, a
private equity owner of anational anesthesia practice
(35:53):
that they monopolize theanesthesia markets.
According to Chair Ferguson,that case was just an ordinary
application of Section 7 of theantitrust merger law that
applies to serial acquisitions.
And he says no reason to singleout private equity.
So I just add, I think that'sanother area where, you know,
(36:15):
folks who may be doing privateequity investment in healthcare,
you know, less likely thatyou're going to see the sort of
thumb on the scale against yourdeal just because the owners
happen to be private equityinvestors.
SPEAKER_01 (36:30):
Yeah.
Yeah, I think that's a goodpoint.
And certainly one that will bewarmly received, I'm sure, by
private equity folks inhealthcare who it seems, you
know, private equity itself isgoing through a tough time just
in terms of returns oninvestment and that sort of
thing.
And so this for them is somerelief, I think, at least
(36:53):
they're not being demonized tothe extent they were under the
prior administration.
Another quick thought on changesand trends and things to think
about.
I mentioned earlier about theHewlett Packard, Juniper deal
being somewhat controversial.
I'll just talk a little bitabout what happened there,
fallout, what people shouldthink about.
(37:17):
The point of contention orcontroversy there had to do with
the parties, I think in thiscase, Hewlett Packard's use of
lobbyists, Trump-alignedlobbyists and advocates who
appeared to have essentiallygone over staff's head and made
their case either to the DOJfront office, Pam Bondi's
(37:38):
office, or maybe even all theway to the White House.
And it's all sort of rumor andinnuendo with some statements
from affected officials, but itdoes seem apparent that that
lobbying effort had an impact onthe outcome of that case.
It certainly had an impact on afew DOJ authorities who were
(38:00):
fired due to insubordination andthe going theory, I think fairly
credible, is that thoseindividuals were opposed to the
settlement that the DOJultimately reached with the
parties and tried to block itusing whatever leverage they
could, which proved to beinsufficient, and then they were
(38:22):
fired.
So that's an important thing tokeep in mind for any party who's
considering that route of sortof like a who you know approach
to antitrust as opposed toleveraging facts and advocacy.
Obviously, I'm biased here.
(38:42):
I'm a lawyer, not a lobbyist.
And for a long time, I worriedthat AI would be taking my job,
but maybe it's the lobbyiststhat are going to take my job.
I doubt that, honestly.
And just a word of caution onthat approach.
I can't deny that it can beeffective and maybe particularly
so in this administration.
(39:04):
It is always consequential,though, for the parties who take
that approach.
Once you go above staff's head,and particularly if you go above
the divisions, the antitrustdivisions head at the DOJ
particularly, there's going tobe significant fallout as there
was here because, you know, Armsare going to get twisted at the
(39:24):
agency.
People are going to be put inextremely uncomfortable
positions.
And some, as happened here, maylose their jobs.
That leaves a very sour tasteamong the DOJ staffers.
And your brand then at the DOJtakes a pretty significant hit.
So if you're a repeat player atthe agency, it's worth thinking
(39:47):
hard about whether or not youwant to pursue a kind of
lobbying approach to gettingyour deal done.
done, it may be effective and itmay be the right choice, but it
does not come without risk, Iwould say.
And I welcome your thoughts onthis, Ferb.
SPEAKER_02 (40:05):
Yeah, I mean, it certainly feels like this was
sort of the nuclear option inthis particular transaction
where staff had already reacheda decision about where they
wanted to go, and that was tolitigation.
And the higher-ups at DOJ wereworking with lobbyists sort of
(40:26):
came over the top and basicallyinstructed them to take a
different approach.
I do think when you do thelobbying probably makes a
difference, right?
I mean, if you're sort ofwaiting till the very end after
staff has reached their decisionand you're really trying to get
the senior most folks at theJustice Department to reverse
(40:49):
something that has already beendecided by staff, that may be a
more maybe a more challengingapproach or a more aggressive
way to go about it than tryingto influence things earlier on.
And I wonder if they did dothat.
I
SPEAKER_01 (41:06):
think that's a good point, actually.
Earlier is better in terms ofavoiding the fallout that you
saw here.
As I said earlier, DOJ hadalready sued in January to block
the deal.
And so you're talking six monthslater than when you're already
in front of a judge saying,essentially, you know, there's,
and you have staff who'sextremely committed to whatever
(41:28):
theory they're pushing in frontof the judge and the whole, the
whole division.
And I trust the vision at theagency, obviously now having
leveraged all their resourcesinto a litigation posture.
There's no way there's, there'sno quick route out of that
without, you know, significantdisagreement at the, at the
(41:49):
division level.
And so earlier, I think, I thinkyou're right, Herb, an earlier
approach to advocacy where youmay be able to avoid all of that
division fallout would bebetter.
SPEAKER_02 (42:02):
Yeah.
Should we just quickly go overthe non-compete developments?
We've had a bunch of them in thelast month.
And early September, the FTCwithdrew its defense of the
national non-compete ban thatwas the rule that was
promulgated under the Bidenadministration which means that
(42:25):
that national non-compete ban isbasically dead.
But at the same time, we havethe FTC chairman coming out and
saying, Chair Ferguson sayingthat we're going to continue to
aggressively enforce theantitrust laws against
non-competes.
And in fact, last week, ChairFerguson issued warning letters,
(42:50):
pretty strongly worded warningletters to large healthcare
companies.
And again, this is specific tohealthcare.
Interesting that Fergusondecided to do this in
healthcare.
I think it shows the focus onhealthcare.
But what he said is, availableinformation suggests that many
healthcare employers andstaffing companies include
(43:11):
non-competes that mayunreasonably limit employment
options for vital roles likenurses, physicians, and other
medical professionals.
And he calls on healthcare onhealthcare companies to do a
comprehensive, careful review oftheir non-competes to make sure
that they're not overbroad.
And I'll say one more thing.
(43:34):
It seems like he's especiallyworried about non-competes in
rural markets.
His letter specifically mentionsconcern in areas where there may
already be a shortage ofproviders of healthcare
professionals.
So interesting developmentsthere.
SPEAKER_01 (43:52):
Yeah, definitely interesting.
And particularly as it comes onthe heels of them sort of
declining to defend thenon-compete rule that the Pire
administration had put in placeand then was challenged in
court.
And so there's a bit of aconflicting message there.
How much do they care aboutnon-competes?
(44:14):
But it's clear, at least inhealth care, that they still
care quite a bit.
And health care companies wearnon-competes.
Non-competes are important andsometimes really quite essential
to investing in a new market orbuilding out a new product and
practice.
There's no doubt that anon-compete allows you to make
(44:38):
an investment with a little bitless risk that it's going to be
poached from a competitor whenthey hire your talent.
This is not to say thatnon-competes cannot exist.
the boundaries and sort ofborders of what's allowable are
a bit hazy at the moment, youknow, but, but they, a
(45:02):
non-compete, there is no blanketban on non-competes anymore.
There, you know, that, that wasa rule that was instituted by
the Biden administration.
And then, like I said,challenged in court, that
blanket ban has gone away.
But the concern about the effectof non-competes has not.
And so it's worth thinking partabout what do you need?
(45:25):
What do you feel comfortablewith in a non-compete?
And is there a way to dial, ifyou have a lot of them, to dial
them back in a way that reducesyour risk of an extended
investigation at the agency?
SPEAKER_02 (45:40):
Yeah, I think in terms of what the substantive
law is that will be appliedhere, this morning letter does
not actually contain any newlaw.
It doesn't contain any newstatement of when enforcement
will happen.
There was a recent enforcementinvolving the pet cremation
business where there were somevery broad non-competes,
(46:02):
national in scope, applied toall of the employees of the sort
of dominant company in the petcremation space.
So I think that's an example ofwhere you can expect to see
scrutiny, right?
If your non-competes apply toeverybody, to the janitor, up to
the CEO and they're national inscope and they last for a year,
(46:24):
that may be something that isoverbroad.
But I think we're going to haveto continue to see what the
agencies do in terms of beingable to give more specific
advice.
SPEAKER_01 (46:36):
Yeah, I
SPEAKER_02 (46:36):
agree.
Well, thanks everybody forjoining us.
Really appreciate Jeff forjoining me.
We had a good discussion andwe'll all stay tuned to more to
come.
I think we're just seeing thefirst inklings of what this is
all going to look like goingforward.
Thank you, Jeff.
SPEAKER_01 (46:55):
Yeah, my pleasure.
Thank you, Herb.
Have a good one.
SPEAKER_00 (47:03):
If you enjoyed this episode, be sure to subscribe to
AHLA's Speaking of Health Lawwherever you get your podcasts.
For more information about AHLAand the educational resources
available to the health lawcommunity, visit
AmericanHealthLaw.org.
And stay updated on breakinghealthcare industry news from
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(47:26):
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UNKNOWN (47:33):
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