## Facts

- University Health, a nonprofit, operated University Hospital in Augusta, Georgia, under a lease from the Richmond County Hospital Authority.
- St. Joseph Hospital, also a nonprofit, was a separate acute-care hospital in the same area.
- University agreed to acquire most of St. Joseph’s assets for more than $38 million and to impose a ten-year covenant not to compete in specified hospital markets.
- The FTC alleged the acquisition would substantially lessen competition in inpatient acute-care hospital services in the Augusta-area market, which included five hospitals.
- The FTC relied on evidence of increased concentration in an already concentrated market and significant entry barriers, including Georgia’s certificate-of-need regime.
- The hospitals argued nonprofit status reduced incentives to exercise market power and claimed efficiencies such as cost savings and improved services.
- The FTC sought a preliminary injunction under FTC Act § 13(b) to prevent consummation pending its administrative adjudication under Clayton Act § 7.

## Issues

1. Whether Clayton Act § 7 applies to asset acquisitions by nonprofit hospitals and is enforceable by the FTC.
2. Whether, under FTC Act § 13(b), the FTC showed a likelihood of ultimate success that the acquisition may substantially lessen competition in the relevant market.
3. Whether nonprofit status and asserted efficiencies can rebut a strong prima facie showing of anticompetitive effect at the preliminary-injunction stage.

## Decision

- The Eleventh Circuit held that Clayton Act § 7 applies to nonprofit hospital asset acquisitions and that nonprofit status does not exempt such transactions from FTC challenge.
- The court found the FTC made a strong prima facie showing that the acquisition would substantially increase concentration in a highly concentrated market, supporting a presumption of likely anticompetitive effects.
- The court emphasized that barriers to entry, including certificate-of-need requirements, strengthened the inference that new entry would not counteract the concentration increase.
- The court rejected the district court’s reliance on nonprofit status as a basis to discount competitive incentives and potential exercise of market power.
- The court concluded the district court improperly credited speculative, insufficiently substantiated efficiencies as outweighing the FTC’s prima facie case.
- The court reversed the denial of injunctive relief and directed the district court to issue the requested preliminary injunction immediately.

## Legal Principles

- Clayton Act § 7 applies to acquisitions by nonprofit entities; coverage turns on likely competitive effects, not corporate form or charitable status.
- Under FTC Act § 13(b), the FTC must show a likelihood of ultimate success in the administrative proceeding and that equitable factors, including the public interest, favor preserving the status quo.
- A substantial concentration increase in an already concentrated relevant market establishes a prima facie case and a presumption of anticompetitive effect under § 7.
- Entry barriers (including certificate-of-need requirements) are probative in assessing whether concentration increases are likely to harm competition.
- Nonprofit status is not a defense to a § 7 prima facie case; nonprofits may still have incentives and ability to exercise market power.
- Efficiency claims must be supported, merger-specific, and sufficient to rebut likely competitive harm; speculative efficiencies generally do not overcome a strong prima facie case at the preliminary-injunction stage.
- When the FTC shows likely success, the public interest in antitrust enforcement generally weighs heavily in favor of preliminary injunctive relief, particularly where consummation could be difficult to unwind.

## Conclusion

The Eleventh Circuit required issuance of a preliminary injunction because the FTC showed a likelihood of success that the nonprofit hospital acquisition may substantially lessen competition, and because nonprofit status and unproven efficiencies did not rebut the presumption arising from increased concentration and high entry barriers.


F.T.C. v. Univ. Health, Inc., 938 F.2d 1206 (11th Cir. 1991)