The Federal Trade Commission’s recently announced proposed settlement of its challenge of CentraCare Health’s acquisition of St. Cloud Medical Group (SCMG) is doubly noteworthy. The settlement ends the challenge of a transaction that apparently was not reportable under the Hart-Scott-Rodino (HSR) Act, and the settlement is premised on a “failing firm” defense that infrequently is accepted by government enforcers.
CentraCare is a nonprofit health system in central Minnesota that includes a multispecialty physician practice group, and SCMG is a physician-owned, multispecialty practice group with about 40 physicians who operate four clinics in central Minnesota. In early 2016, CentraCare announced its planned acquisition of SCMG. According to the FTC, this acquisition would combine the two largest providers of adult primary care, pediatric and OB/GYN services in the St. Cloud area. After the Minnesota Attorney General reportedly began an investigation of the acquisition and asked for the closing to be delayed, the FTC filed a complaint alleging that the acquisition agreement was an unfair method of competition in violation of Section 5 of the FTC Act, and that the acquisition, if consummated, would substantially lessen competition in violation of Section 7 of the Clayton Act. Continue Reading