Federal Trade Commissioner v. Butterworth Health Corp.

Grand Rapids, Michigan, had four hospitals, including Butterworth Health Corporation and Blodgett Memorial Medical Center (collectively, the hospitals) (defendants). The hospitals were both nonprofit hospitals that provided general acute and primary inpatient services. As nonprofit hospitals, the hospitals were controlled by boards of directors made up of members of the community. A commission was created to study the hospital needs of the Grand Rapids area and make recommendations for hospital planning. Based on recommendations of the commission, the hospitals proposed to merge. The hospitals presented evidence showing that without a merger they would collectively spend over $260 million in capital expenditures to upgrade their respective facilities. With a merger, the hospitals estimated they would spend just over $161 million, saving $99 million. The Federal Trade Commission (FTC) (plaintiff) sought a preliminary injunction enjoining the merger, arguing that the merger was likely to substantially lessen competition in violation of § 7 of the Clayton Act. To support its case, the FTC presented evidence that the proposed merger would result in highly concentrated market power in the relevant markets. Usually, this evidence would make a prima facie case resulting in a rebuttable presumption that the merger was illegal under § 7. The hospitals argued that the presumption of illegality was improper in the context of nonprofit hospital mergers.