[Federal Register Volume 59, Number 36 (Wednesday, February 23, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4043]
[[Page Unknown]]
[Federal Register: February 23, 1994]
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FEDERAL TRADE COMMISSION
[Docket 9256]
Columbia Hospital Corporation; Proposed Consent Agreement With
Analysis To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: In settlement of alleged violations of Federal law prohibiting
unfair acts and practices and unfair methods of competition, this
consent agreement, accepted subject to final Commission approval, would
prohibit, among other things, any hospital combination in the Charlotte
County, Florida, area involving Columbia that would threaten
competition. The proposed consent agreement would require the
respondent to seek prior Commission approval, for ten years, before
consummating any partial or total merger of a hospital in the
designated area with any other hospital in that area.
DATES: Comments must be received on or before April 25, 1994.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
room 159, 6th Street and Pennsylvania Avenue NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT:
Oscar Voss, FTC/S-3115, Washington, DC 20580. (202) 326-2750.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 3.25(f) of
the Commission's Rules of Practice (16 CFR 3.25(f)), notice is hereby
given that the following consent agreement containing a consent order
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 sixty (60) days. Public comment is invited. Such
comments or views will be considered by the Commission and will be
available for inspection and copying at its principal office in
accordance with Sec. 4.9(b)(6)(ii) of the Commission's Rules of
Practice (16 CFR 4.9(b)(6)(ii)).
Agreement Containing Consent Order
The agreement herein, by and between Columbia Healthcare
Corporation (a corporation into which Columbia Hospital Corporation was
merged after the issuance of the complaint in this matter), hereinafter
sometimes referred to as ``respondent,'' by its duly designated officer
and attorney, and counsel for the Federal Trade Commission, is entered
into in accordance with the Commission's Rule governing consent order
procedures. In accordance therewith the parties hereby agree that:
1. Respondent Columbia Healthcare Corporation is a corporation
organized, existing and doing business under the laws of Delaware, with
its principal place of business at 201 West Main Street, Louisville,
Kentucky.
2. Respondent's predecessor Columbia Hospital Corporation has been
served with a copy of the complaint issued by the Federal Trade
Commission charging it with violation of section 7 of the Clayton Act
and section 5 of the Federal Trade Commission Act, and has filed an
answer to said complaint denying said charges.
3. Respondent admits all the jurisdictional facts set forth in the
Commission's complaint in this proceeding.
4. Respondent waives:
(a) Any further procedural steps;
(b) The requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law;
(c) All rights to seek judicial review or otherwise to challenge or
contest the validity of the order entered pursuant to this agreement;
and
(d) Any claim under the Equal Access to Justice Act.
5. This agreement shall not become part of the public record of the
proceeding unless and until it is accepted by the Commission. If this
agreement is accepted by the Commission it will be placed on the public
record for a record of sixty (60) days and information in respect
thereto publicly released. The Commission thereafter may either
withdraw its acceptance of this agreement and so notify respondent, in
which event it will take such action as it may consider appropriate, or
issue and serve its decision, in disposition of the proceeding.
6. This agreement is for settlement purposes only and does not
constitute an admission by respondent that the law has been violated as
alleged in the complaint issued by the Commission.
7. This agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of Sec. 3.25(f) of the
Commission's Rules, the Commission may, without further notice to
respondent, (1) issue its decision containing the following order to
cease and desist in disposition of the proceeding and (2) make
information public in respect thereto. When so entered, the order to
cease and desist shall have the same force and effect and may be
altered, modified or set aside in the same manner and within the same
time provided by statute for other orders. The order shall become final
upon service. Delivery by the U.S. Postal Service of the decision
containing the agreed-to order to respondent's address as stated in
this agreement shall constitute service. Respondent waives any right it
may have to any other manner of service. The complaint may be used in
construing the terms of the order, and no agreement, understanding,
representation or interpretation not contained in the order or the
agreement may be used to vary or contradict the terms of the order.
8. Respondent has read the complaint and the order contemplated
hereby. Respondent understands that once the order has become final, it
will be required to file one or more compliance reports showing that it
has fully complied with the order. Respondent further understands that
it may be liable for civil penalties in the amount provided by law for
each violation of the order after it becomes final.
Order
I
It is ordered That, for the purposes of this order, the following
definitions shall apply:
A. ``Columbia'' means Columbia Healthcare Corporation, a
corporation organized, existing and doing business under the laws of
Delaware, with its principal place of business at 201 West Main Street,
Louisville, Kentucky, as well as its officers, employees, agents,
parents, divisions, subsidiaries, affiliates, successors and assigns,
and the officers, employees, or agents of Columbia's divisions,
subsidiaries, affiliates, successors and assigns.
B. ``Acute care hospital'' means a health facility, other than a
federally owned facility, having a duly organized governing body with
overall administrative and professional responsibility, and an
organized medical staff, that provides 24-hour inpatient care, as well
as outpatient services, and having as a primary function the provision
of inpatient services for medical diagnosis, treatment, and care of
physically injured or sick persons with short-term or episodic health
problems or infirmities. For purposes of this Order, health facilities
whose inpatient services are limited to mental health care,
rehabilitation or substance abuse are not ``acute care hospitals.''
C. To ``acquire an acute care hospital'' means to directly or
indirectly acquire the whole or any part of the assets of an acute care
hospital; to acquire the whole or any part of the stock or share
capital of, the right to designate directly or indirectly directors or
trustees of, or any equity or other interest in, any person which
operates an acute care hospital; or to enter into any other arrangement
to obtain direct or indirect ownership, management or control of an
acute care hospital or any part thereof, including but not limited to a
lease of or management contract for an acute care hospital.
D. To ``operate an acute care hospital'' means to own, lease,
manage, or otherwise control or direct the operations of an acute care
hospital, directly or indirectly.
E. ``Affiliate'' means an entity whose management and policies are
controlled or directed in any way, directly or indirectly, by the
persons with which it is affiliated.
F. The ``Charlotte County area'' means the combined area consisting
of Charlotte County, Florida, together with those portions of Sarasota
and DeSoto Counties, Florida within twelve (12) miles of the present
site of Columbia's Fawcett Memorial Hospital in Port Charlotte,
Florida, excluding the part of that combined area which is west of the
Myakka River.
G. ``Person'' means any natural person, partnership, corporation,
company, association, trust, joint venture or other business or legal
entity, including any governmental agency.
H. The ``Commission'' means the Federal Trade Commission.
II
It is further ordered That, for a period of ten (10) years from the
date this Order becomes final, Columbia shall not, without the prior
approval of the Commission:
A. Acquire any acute care hospital in the Charlotte County area; or
B. Permit any acute care hospital it operates in the Charlotte
County area to be acquired by any person that operates, or will operate
immediately following such acquisition, any other acute care hospital
in the Charlotte County area.
Provided, however, that such prior approval shall not be required
for:
(1) The establishment of a new hospital service or facility (other
than as a replacement for a hospital service or facility, not operated
by Columbia, in the Charlotte County area, pursuant to an agreement or
understanding between Columbia and the person operating the replaced
service of facility); or
(2) Any transaction subject to this Paragraph II of this Order if
the fair market value of (or, in case of a purchase acquisition, the
consideration to be paid for) the hospital, part thereof or interest
therein to be acquired does not exceed one million dollars
($1,000,000).
III
It is further ordered That, for a period of ten (10) years from the
date this Order becomes final, Columbia shall not, without providing
advance notification to the Commission, consummate any joint venture or
other arrangement with any other acute care hospital in the Charlotte
County area for the joint establishment or operation of any new acute
care hospital, hospital medical or surgical diagnostic or treatment
service or facility, or part thereof in the Charlotte County area. Such
advance notification shall be filed immediately upon Columbia's
issuance of a letter of intent for, or execution of an agreement to
enter into, such a transaction, whichever is earlier.
The notification required by this Paragraph III of this Order shall
be given on the Notification and Report Form set forth in the appendix
to part 803 of title 16 of the Code of Federal Regulations (as
amended), and shall be prepared and transmitted in accordance with the
requirements of that part, except that no filing fee will be required
for any such notification, notification need not be made to the United
States Department of Justice, and notification is required only of
Columbia and not of any other party to the transaction. If the
transaction for which notification is required by this Paragraph III of
this Order requires state regulatory approval under a health facilities
certificate of need law, Columbia may, in lieu of the foregoing
notification, submit to the Commission a copy of the application for
such state approval.
Columbia shall comply with reasonable requests by the Commission
staff for additional information concerning any transaction subject to
this Paragraph III of this Order, within fifteen (15) days of service
of such requests.
Provided, however, that no transaction shall be subject to this
Paragraph III of this Order if:
(1) The fair market value of the assets to be contributed to the
joint venture or other arrangement by acute care hospitals not operated
by Columbia does not exceed one million dollars ($1,000,000);
(2) The service, facility or part thereof to be established or
operated in a transaction subject to this Order is to engage in no
activities other than the provision of the following services: Laundry;
data processing; purchasing; materials management; billing and
collection; dietary; industrial engineering; maintenance; printing;
security; records management; laboratory testing; personnel education,
testing, or training; or health care financing (such as through a
health maintenance organization or preferred provider organization); or
(3) Notification is required to be made, and has been made,
pursuant to section 7A of the Clayton Act, 15 U.S.C. 18a, or prior
approval by the Commission is required, and has been requested,
pursuant to Paragraph II of this order.
IV
It is further ordered, That, for a period of ten (10) years from
the date this Order becomes final, Columbia shall not permit all or any
substantial part of any acute care hospital it operates in the
Charlotte County area to be acquired by any other person unless the
acquiring person files with the Commission, prior to the closing of
such acquisition, a written agreement to be bound by the provisions of
this order, which agreement Columbia shall require as a condition
precedent to the acquisition.
V
It is further ordered, That Columbia shall, one year after the date
this Order becomes final and annually for nine (9) years thereafter,
file with the Commission a verified written report setting forth in
detail the manner and form in which it has complied and intends to
comply with this Order.
VI
It is further ordered That, for the purposes of determining or
securing compliance with this Order, and subject to any legally
recognized privilege, upon written request and on reasonable notice to
Columbia made at its principal offices, Columbia shall permit any duly
authorized representatives of the Commission:
1. Access, during office hours and in the presence of counsel, to
inspect and copy all books, ledgers, accounts, correspondence,
memoranda and all other records and documents in Columbia's possession
or control relating to any matter contained in this Order; and
2. Upon five days' notice to Columbia and without restraint or
interference from Columbia, to interview its officers or employees, who
may have counsel present, regarding such matters.
VII
It is further ordered, That Columbia shall notify the Commission at
least thirty (30) days prior to any proposed change, such as
dissolution, assignment, sale resulting in the emergence of a successor
corporation or association, or the creation or dissolution of
subsidiaries or affiliates, which may affect compliance obligations
arising out of this order.
Analysis of Proposed Consent Order To Aid Public Comment
Columbia Hospital Corp. (Docket No. 9256)
The Federal Trade Commission has accepted, subject to final
approval, an agreement to a proposed consent order from Columbia
Healthcare Corporation, successor to respondent Columbia Hospital
Corporation (hereinafter collectively ``Columbia''). The agreement
would settle charges by the Federal Trade Commission that Columbia's
proposed acquisition of Medical Center Hospital, in Punta Gorda,
Florida, violated section 5 of the Federal Trade Commission Act, and
would also have violated section 7 of the Clayton Act if it had been
carried out.
The proposed consent order has been placed on the public record for
sixty (60) days for reception of comments by interested persons.
Comments received during this period will become part of the public
record. After sixty (60) days, the Commission will again review the
agreement and the comments received and will decide whether it should
withdraw from the agreement or issue and serve the agreement's proposed
order.
The Complaint
The Commission issued an administrative complaint against Columbia
Hospital Corp. on February 18, 1993. According to the complaint,
Columbia operates Fawcett Memorial Hospital, a general acute care
hospital in Port Charlotte, Florida, and related health care
facilities. Columbia agreed to acquire Medical Center Hospital, a
general acute care hospital in Punta Gorda, Florida, about five miles
south of Port Charlotte. The complaint alleges that Fawcett and Medical
Center were competitors in the market for acute care inpatient hospital
services in an area including all but the westernmost portions of
Charlotte County, Florida, plus adjacent portions of DeSoto and
Sarasota Counties in Florida. That market, according to the complaint,
was already highly concentrated, and entry by new competitors would be
difficult. The complaint charged that if Columbia carried out its
agreement to acquire Medical Center, the effect of that acquisition
would be substantially to lessen competition in the Charlotte County
area hospital market, in violation of section 5 of the Federal Trade
Commission Act and section 7 of the Clayton Act.
The proposed acquisition challenged in the administrative complaint
was never completed. After the Commission issued the complaint, the
proposed acquisition was preliminarily enjoined by a Federal court,
pursuant to section 13(b) of the FTC Act. Federal Trade Commission v.
Columbia Hospital Corp., 93-30-Civ-FTM-23D (M.D. Fla., injunction
issued May 21, 1993). The court's injunction prohibiting the
acquisition will remain in effect until the Commission gives final
approval to the proposed consent order, or until the Commission's
administrative proceeding against Columbia is otherwise concluded.
The Proposed Consent Order
The first paragraph of the proposed order defines certain other
terms used in the order.
Paragraph II would prohibit Columbia from acquiring, without the
prior approval of the Federal Trade Commission, all or any significant
part of a general acute care hospital in the ``Charlotte Country area''
(an area including most of Charlotte County, Florida, and some adjacent
portions of DeSoto and Sarasota Counties in Florida). It would also
prohibit Columbia from transferring, without prior Commission approval,
any general hospital or significant part thereof it operates in that
area to another person operating (or simultaneously acquiring) a
general hospital in the area. These provisions would give the
Commission authority to prohibit any substantial combination of the
general acute care hospital operations of Columbia with those of any
non-Columbia general hospital in the Charlotte County area, unless
Columbia convinced the Commission that a particular transaction would
not endanger competition in the Charlotte County area hospital market.
Paragraph III would require Columbia to provide advance notice to
the Commission of joint ventures with non-Columbia hospitals for the
establishment of new hospital facilities or services in the Charlotte
County area. This Paragraph would not apply to transactions subject to
the prior approval requirement of Paragraph II, or to the Clayton Act's
premerger notification requirements.
Both Paragraph II and Paragraph III would not cover acquisitions
and joint ventures where the value of the acquired assets, or the
assets contributed to a joint venture by participants other than
Columbia, is $1 million or less. Nor would Paragraph III apply to joint
ventures between Columbia and non-Columbia hospitals that are limited
to the provision of certain specified hospital support services (such
as laundry or laboratory testing) or the establishment of new health
plans (such as health maintenance organizations). In addition,
Paragraphs II and III would both expire ten years after the order
becomes final.
Paragraph IV of the proposed order would prohibit, for ten years,
Columbia from transferring any hospital in the Charlotte County area to
any other person without first filing with the Commission an agreement
by the transferee to be bound by the order. Paragraphs V and VI of the
proposed order would require Columbia to make annual reports to the
Federal Trade Commission, and to make certain documents and personnel
available to the Commission upon request, so the Commission may verify
compliance with the order. Finally, Paragraph VII of the proposed order
would require Columbia to notify the Commission at least thirty days
before any proposed change in corporate structure that may affect
compliance with the order.
The purpose of this analysis is to invite public comment concerning
the proposed order, in order to assist the Commission in its
determination whether to make the order final. This analysis is not
intended to constitute an official interpretation of the agreement and
order or to modify their terms in any way.
The agreement is for settlement purposes only and does not
constitute an admission by the respondent that its proposed acquisition
violated or would have violated the law, as alleged in the Commission's
complaint.
Donald S. Clark,
Secretary.
Separate Statement of Commissioner Mary L. Azcuenaga Concurring in Part
and Dissenting in Part in Columbia Hospital Corporation, Docket 9256
I concur in the decision to publish the proposed consent agreement
for comment, but I would have preferred that the proposed order require
Columbia to provide notice of acquisitions outside the relevant market.
Prior notice can be useful, the Commission has required such relief in
other litigated hospital merger cases, see, e.g., Hospital Corporation
of America, 106 F.T.C. 361, 524 (1985), aff'd, 807 F.2d 1381 (7th Cir.
1986), cert. denied, 107 S. Ct. 1975 (1987), and there is no apparent
reason for granting more favorable treatment to this respondent.
[FR Doc. 94-4043 Filed 2-22-94; 8:45 am]
BILLING CODE 6750-01-M