A Step Forward or Backward: The Court’s Application of Geographic Market Definition Principles in FTC et al. v. Thomas Jefferson University and Albert Einstein Healthcare

The Federal Trade Commission and the Pennsylvania Office of Attorney General recently challenged a proposed hospital system merger in the Philadelphia, PA area as a violation of Section 7 of the Clayton Act. The FTC lost this challenge in large part because it failed to convince the Court of the two alleged relevant geographic markets for inpatient general acute care despite apparent agreement between the two sides economists about plausibility of the hypothetical monopolist market definition test constructed by statistical analysis. It appears the Court required that purchaser fact-witnesses “bless” the market boundaries asserted by the Government. Although court insistence on this guiding principle has obvious merit and serves as a check on plaintiff’s(s’) expert’s quantitative findings, the Opinion references multiple “facts” that seem irrelevant to proving an antitrust market or demonstration of likely adverse unilateral effects. This article reviews the publicly available evidence in this matter, and discusses both geographic and other aspects of the case.

By David Eisenstadt & James Langenfeld¹

I. INTRODUCTION

On February 27, 2020 the Government (the Federal Trade Commission and the Pennsylvania Office of Attorney General) challenged the proposed merger of Thomas Jefferson University (“TJU”) and Albert Einstein Healthcare Network (“AEHN”) (the “merging parties”) as a violation of Section 7 of the Clayton Act.² On the same date