State Enforcers Expanding Premerger and Antitrust Jurisdiction Over Healthcare Transactions: Guidance for This Growing Trend

Given the importance and rising costs of healthcare as well as a concern about whether federal authorities have the same interests and incentives to enforce the antitrust laws, recently states have taken actions to be better informed about, challenge, or prevent healthcare affiliations.  For example, Connecticut and Washington enacted and California has proposed legislation requiring premerger notification to their respective state attorney general offices of certain healthcare-related deals before consummation.  These states can then use the information gathered from these notifications for their investigative and enforcement functions – possibly challenging the transactions.  Notably, unlike the federal premerger notification system under the Hart-Scott-Rodino Antitrust Improvements Act (HSR),¹ neither the Connecticut nor the Washington statute has a minimum size-of-transaction threshold.  Indeed, under Connecticut’s statute, a hospital acquiring a group practice of two physicians must be reported.  Therefore, even small transactions, which might have gone unnoticed by federal enforcers, could be subject to antitrust scrutiny by state enforcement agencies.