Federal Trade Commission and State of Illinois v. Advocate Health Care Network, et al.

In 2004, Advocate Health Care Network (Advocate) and NorthShore University HealthSystem (NorthShore) (defendants), two northern Chicago hospital networks, announced plans to merge. In response, the Federal Trade Commission (FTC) and the State of Illinois (government) (plaintiffs) filed suit against Advocate and NorthShore. The complaint alleged that the merger would lessen competition in the relevant market in violation of § 7 of the Clayton Act. The government then moved for a preliminary injunction. The district court held a hearing to determine whether the motion should be granted. During the hearing, the FTC’s economic expert, Dr. Tenn, testified that he had used the hypothetical-monopolist test to determine the relevant geographic market. Dr. Tenn also testified that his analysis assumed that patients prefer local hospitals and that he had excluded from the geographic market hospitals that attract patients at long distances, i.e., destination hospitals. Multiple insurers testified that an insurance plan in the area must include either Advocate or NorthShore. The district court found that Dr. Tenn’s analysis was circular and that there was no basis for treating destination and local hospitals differently. The district court therefore denied the injunction on the ground that the government had not shown a likelihood of success on the merits. The matter was appealed.