What Happens When Parties Abandon a Transaction Challenged by the FTC?
When the Federal Trade Commission (FTC) makes a determination to challenge a hospital transaction, the FTC first seeks injunctive relief from the relevant federal district court, requesting that the court prohibit the hospitals from consummating the transaction during the pendency of the FTC’s administrative process. Once the district court makes a decision, either the FTC or the hospitals can appeal the decision to the appropriate court of appeals.
Generally, the parties (both the FTC and the hospital parties) accept the determination of the court of appeals. If the court of appeals upholds a district court’s injunction, the hospitals often abandon the transaction. Traditionally, in those cases, the hospitals and the FTC jointly agree to seek dismissal of the administrative matter pending before the FTC. However, current actions by the FTC may indicate a policy shift, suggesting that the FTC may now attempt to obtain additional relief even if the hospitals abandon a transaction. While this approach is consistent with the FTC’s decision to rescind its 1995 Policy Statement Concerning Prior Approval and Prior Notice Provisions, it is unclear whether the FTC would have jurisdiction for such relief in the absence of a transaction (particularly for nonprofit hospitals), and that is a question worth monitoring.