[Federal Register Volume 79, Number 215 (Thursday, November 6, 2014)]
[Notices]
[Pages 65955-65958]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-26433]
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FEDERAL TRADE COMMISSION
[File No. 141 0183]
H.I.G. Bayside Debt & LBO Fund II, L.P. and Crestview Partners,
L.P. ; Analysis to Aid Public Comment
AGENCY: Federal Trade Commission.
[[Page 65956]]
ACTION: Proposed consent agreement.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair methods of competition.
The attached Analysis to Aid Public Comment describes both the
allegations in the draft complaint and the terms of the consent
orders--embodied in the consent agreement--that would settle these
allegations.
DATES: Comments must be received on or before December 2, 2014.
ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/higbaysidedebtconsent online or on
paper, by following the instructions in the Request for Comment part of
the SUPPLEMENTARY INFORMATION section below. Write ``In the Matter of
H.I.G. Bayside Debt & LBO Fund II, L.P., and Crestview Partners, L.P.,
Matter No. 141 0183'' on your comment and file your comment online at
https://ftcpublic.commentworks.com/ftc/higbaysidedebtconsent by
following the instructions on the web-based form. If you prefer to file
your comment on paper, write ``In the Matter of H.I.G. Bayside Debt &
LBO Fund II, L.P., and Crestview Partners, L.P., Matter No. 141 0183''
on your comment and on the envelope, and mail it to the following
address: Federal Trade Commission, Office of the Secretary, 600
Pennsylvania Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580,
or deliver your comment to the following address: Federal Trade
Commission, Office of the Secretary, Constitution Center, 400 7th
Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC 20024.
FOR FURTHER INFORMATION CONTACT: Jill Frumin, Bureau of Competition,
(202-326-2758), 600 Pennsylvania Avenue NW., Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34,
notice is hereby given that the above-captioned consent agreement
containing consent orders to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of thirty (30) days. The
following Analysis to Aid Public Comment describes the terms of the
consent agreement, and the allegations in the complaint. An electronic
copy of the full text of the consent agreement package can be obtained
from the FTC Home Page (for October 31, 2014), on the World Wide Web,
at http://www.ftc.gov/os/actions.shtm.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before December 2,
2014. Write ``In the Matter of H.I.G. Bayside Debt & LBO Fund II, L.P.,
and Crestview Partners, L.P., Matter No. 141 0183'' on your comment.
Your comment--including your name and your state--will be placed on the
public record of this proceeding, including, to the extent practicable,
on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries to
remove individuals' home contact information from comments before
placing them on the Commission Web site.
Because your comment will be made public, you are solely
responsible for making sure that your comment does not include any
sensitive personal information, like anyone's Social Security number,
date of birth, driver's license number or other state identification
number or foreign country equivalent, passport number, financial
account number, or credit or debit card number. You are also solely
responsible for making sure that your comment does not include any
sensitive health information, like medical records or other
individually identifiable health information. In addition, do not
include any ``[t]rade secret or any commercial or financial information
which . . . is privileged or confidential,'' as discussed in Section
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR
4.10(a)(2). In particular, do not include competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
If you want the Commission to give your comment confidential
treatment, you must file it in paper form, with a request for
confidential treatment, and you have to follow the procedure explained
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept
confidential only if the FTC General Counsel, in his or her sole
discretion, grants your request in accordance with the law and the
public interest.
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\1\ In particular, the written request for confidential
treatment that accompanies the comment must include the factual and
legal basis for the request, and must identify the specific portions
of the comment to be withheld from the public record. See FTC Rule
4.9(c), 16 CFR 4.9(c).
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Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/higbaysidedebtconsent by following the instructions on the web-
based form. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that Web site.
If you file your comment on paper, write ``In the Matter of H.I.G.
Bayside Debt & LBO Fund II, L.P., and Crestview Partners, L.P., Matter
No. 141 0183'' on your comment and on the envelope, and mail your
comment to the following address: Federal Trade Commission, Office of
the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex D),
Washington, DC 20580, or deliver your comment to the following address:
Federal Trade Commission, Office of the Secretary, Constitution Center,
400 7th Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC
20024. If possible, submit your paper comment to the Commission by
courier or overnight service.
Visit the Commission Web site at http://www.ftc.gov to read this
Notice and the news release describing it. The FTC Act and other laws
that the Commission administers permit the collection of public
comments to consider and use in this proceeding as appropriate. The
Commission will consider all timely and responsive public comments that
it receives on or before December 2, 2014. You can find more
information, including routine uses permitted by the Privacy Act, in
the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.
Analysis of Agreement Containing Consent Orders to Aid Public Comment
I. Introduction And Background
The Federal Trade Commission (``Commission'') has accepted for
public comment, subject to final approval, an Agreement Containing
Consent Orders (``Consent Agreement'') from H.I.G. Bayside Debt & LBO
Fund II, L.P. (``H.I.G.''), and Crestview Partners, L.P.
(``Crestview''). The purpose of the proposed Consent Agreement is to
remedy the anticompetitive effects that otherwise would result from the
acquisition of Symbion Holdings Corporation (``Symbion''), a Crestview
subsidiary, by Surgery Center Holdings, Inc. (``Surgery Partners''), an
H.I.G. subsidiary. The proposed Consent Agreement requires Surgery
Partners to divest its ownership interest in the Blue Springs Surgery
Center (``Blue Springs'') in Orange City, Florida, which it will
acquire as part of its acquisition of Symbion, to a Commission-approved
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acquirer, and in a manner approved by the Commission, no later than
sixty (60) days after the Commission's final Decision and Order is
issued. Under the proposed Consent Agreement, Surgery Partners is
required to hold separate the to-be-divested interest and maintain the
economic viability and competitiveness of Blue Springs until the
potential acquirer is approved by the Commission and the divestiture is
complete. In the event that a timely divestiture of Surgery Partners'
Blue Springs interest is not accomplished, the Decision and Order
provides that the Commission may appoint a trustee to divest either
Surgery Partners' ownership interest in Blue Springs, or its ownership
interest in Orange City Surgery Center (``OCSC''), a competing facility
in Orange City in which Surgery Partners owns a controlling interest.
The proposed Consent Agreement has been placed on the public record
for thirty days to solicit comments from interested persons. Comments
received during this period will become part of the public record.
After 30 days, the Commission again will review the proposed Consent
Agreement and comments received, and decide whether it should withdraw
the Consent Agreement, modify the Consent Agreement, or make it final.
On June 13, 2014, Surgery Partners and Symbion signed a merger
agreement pursuant to which Surgery Partners agreed to acquire all of
the voting securities of Symbion for $792 million. The Commission's
complaint alleges that the proposed acquisition, if consummated, would
violate Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and
Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C.
45, by eliminating actual, direct, and substantial competition between
the parties for the sale and provision of outpatient surgical services
to commercial health plans and commercially insured patients in the
Orange City/Deltona market in Florida. The proposed Consent Agreement
would remedy the alleged violations by requiring a complete divestiture
of Surgery Partners' ownership interest in Blue Springs in the affected
market. The divestiture will restore the competition that otherwise
would be lost as a result of the proposed acquisition.
II. The Parties
H.I.G. is a private equity fund that owns 100% of Surgery Partners.
Surgery Partners owns, in whole or in part, 47 ambulatory surgery
centers (``ASCs'') in 17 states across the country. Surgery Partners
generated approximately $280 million in revenue during 2013.
Crestview is a private equity firm that owns 100% of Symbion.
Symbion owns, in whole or in part, 44 ASCs in 21 states, as well as
several short-stay surgical hospitals and other clinical facilities.
Symbion generated more than $535 million in revenue during 2013.
III. Outpatient Surgical Services in Orange City/Deltona, Florida
The relevant product market in which Surgery Partners' proposed
acquisition of Symbion poses antitrust concerns is the sale and
provision of outpatient surgical services to commercial health plans
and commercially insured patients. Outpatient surgical services are
sold to commercial health plans, which then sell benefit plans to
commercially insured patients. Outpatient surgical procedures can be
performed at an ASC, a specialty hospital, or a general acute care
hospital.
When commercial health plans reimburse providers for outpatient
surgical services, they pay two fees: A professional services fee to
the surgeon who performed the procedure and a separate facility fee to
the ASC or hospital where the procedure was performed. The facility fee
covers use of the operating room as well as other costs associated with
the procedure, such as nursing services or supplies. The potential
anticompetitive effects of the proposed acquisition here are limited to
facility fees. The acquisition is unlikely to have an anticompetitive
effect on professional services fees because Blue Springs and OCSC do
not employ physicians and, therefore, do not charge or compete for
those fees.
Outpatient surgical services markets are local in nature. Evidence
gathered during our investigation of the proposed acquisition
establishes that patients have a strong preference for receiving
outpatient surgical services within the area where they live or work.
Accordingly, the proposed acquisition raises serious antitrust concerns
for patients seeking outpatient surgical services in the southwestern
Volusia County, Florida, area, which includes the cities of Orange City
and Deltona, Florida (the ``Orange City/Deltona Area''). The evidence
indicates that commercially insured patients who reside in the Orange
City/Deltona Area are unlikely to seek outpatient surgical services
from more distant providers, even in response to a small but
significant and non-transitory increase in price.
The proposed acquisition would combine the only two multi-specialty
ASCs in the Orange City/Deltona Area, Symbion's Blue Springs and
Surgery Partners' OCSC, and, post-merger, would leave commercial health
plans and commercially insured patients in the Orange City/Deltona Area
with only one meaningful alternative to Surgery Partners for outpatient
surgical services. Absent relief, the proposed acquisition would
substantially increase concentration in the Orange City/Deltona Area
market for outpatient surgical services. Using the Herfindahl-Hirschman
Index (``HHI''), the standard measure of market concentration under the
2010 Department of Justice and Federal Trade Commission Merger
Guidelines (``Merger Guidelines''), the proposed acquisition would
result in a post-merger HHI of greater than 2,500 and a delta of
greater than 1,000, thus creating a presumption under the Merger
Guidelines that the transaction will result in competitive harm.
IV. Competitive Effects of the Proposed Acquisition
The evidence gathered in staff's investigation establishes that
Symbion's Blue Springs and Surgery Partners' OCSC are each other's
closest competitors, competing head-to-head on a number of price and
non-price factors. By eliminating this close competition between
Surgery Partners and Symbion, the proposed acquisition is likely to
increase Surgery Partners' bargaining leverage in post-merger
negotiations with commercial health plans in the Orange City/Deltona
Area and result in higher reimbursement rates. Absent relief, the
proposed acquisition would also reduce Surgery Partners' competitive
incentives to maintain and improve the quality of care of its ASCs in
the Orange City/Deltona Area. Ultimately, these effects would be felt
by local patients in the form of higher health insurance premiums and
out-of-pocket costs, as well as reduced access to high quality care.
New entry or expansion is unlikely to deter or counteract the
anticompetitive effects of the proposed acquisition in the Orange City/
Deltona Area. Significant entry barriers include the time and costs
associated with constructing or expanding an ASC or hospital-based
outpatient surgical services facility, regulatory and licensing
requirements that govern the provision of outpatient surgical services,
and the need to recruit a sufficient number of physicians to staff an
ASC in order to restore the competition lost as a result of the
proposed acquisition. Several market-specific factors, including a lack
of sufficient demand and the potential inability to recruit qualified
personnel to the area, also reduce the likelihood of new entry in the
Orange City/Deltona Area. For these
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reasons, it is unlikely that new entry or expansion sufficient to
achieve a significant market impact will occur in a timely manner.
V. The Proposed Consent Agreement
The proposed Consent Agreement remedies the concerns about the
effect of the transaction on competition in the Orange City/Deltona
Area. The proposed Consent Agreement would maintain competition in the
area by requiring Surgery Partners to fully divest its newly acquired
ownership interest in Blue Springs in a manner approved by the
Commission. The parties have indicated they will propose to divest this
interest in Blue Springs to Dr. Mark Hollmann, one of Blue Springs'
other current owners, who is actively involved in Blue Springs'
operations and a physician at the ASC. Any potential buyer for this
ownership interest is subject to the prior approval of the Commission.
The proposed Consent Agreement requires Surgery Partners to provide
transitional services to the approved acquirer for a period of up to
six months, renewable for an additional six months at the option of the
acquirer, to assist the acquirer in operating Blue Springs as a viable
and ongoing business. Until the divestiture is completed, Surgery
Partners is required to hold its interest in Blue Springs separate,
subject to the standard terms of the Order to Hold Separate and
Maintain Assets (``Hold Separate Order''). Additionally, the Commission
has appointed Richard Shermer as the Hold Separate Monitor to oversee
compliance with the Hold Separate Order. If, for any reason, Surgery
Partners fails to divest its interest in Blue Springs within sixty (60)
days after entry of the final Decision and Order, the Commission has
the right to appoint a divestiture trustee to divest Surgery Partners'
interest in either Blue Springs or OCSC, expeditiously and at no
minimum price.
The sole purpose of this analysis is to facilitate public comment
on the Consent Agreement. This analysis does not constitute an official
interpretation of the Consent Agreement or modify its terms in any way.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2014-26433 Filed 11-5-14; 8:45 am]
BILLING CODE 6750-01-P