## Facts

- A public hospital in Jefferson Parish, Louisiana (East Jefferson Hospital) contracted exclusively with one anesthesiology group to provide all anesthesiology services for hospital patients.
- Dr. Edwin G. Hyde, an anesthesiologist, was denied staff privileges because the exclusive contract foreclosed noncontracting anesthesiologists from practicing anesthesiology at the hospital.
- Hyde sued under § 1 of the Sherman Act, alleging an unlawful tying arrangement: the hospital’s operating room services (tying product) were conditioned on use of the hospital-designated anesthesiology services (tied product).
- The district court found any anticompetitive effects minimal and outweighed by asserted patient-care benefits, and entered judgment for the hospital.
- The Fifth Circuit reversed, treating the arrangement as a per se unlawful tie based on coercion, market power, and a not insubstantial effect on commerce.
- The Supreme Court granted certiorari to review whether the arrangement constituted an unlawful tie and whether per se treatment was warranted.

## Issues

1. Whether the hospital’s exclusive anesthesiology contract constituted a tying arrangement under § 1 of the Sherman Act.
2. Whether, assuming a tie, the arrangement was per se unlawful or required a more effects-based analysis.
3. Whether the hospital possessed sufficient market power in the relevant market to force patients to accept the tied anesthesiology services.

## Decision

- The Supreme Court reversed the Fifth Circuit and held the exclusive contract did not violate § 1 of the Sherman Act.
- The Court held that tying analysis must focus on the market in which consumers purchase the allegedly tied products—here, the hospital’s sale of services to patients—rather than the hospital’s internal contracting with physicians.
- The Court explained that a tie requires separate products, assessed by whether there is sufficient consumer demand for separate purchase of the alleged tied service to identify a distinct product market.
- Even assuming separateness, the Court found inadequate proof that the hospital had market power in the relevant hospital-services market to coerce patients.
- The Court found no showing that the arrangement adversely affected price, quality, output, or competition in either hospital services or anesthesiology services.
- Because the prerequisites for per se condemnation were not shown—particularly market power and likely competitive harm—the Court declined to treat the arrangement as per se unlawful.

## Legal Principles

- A tying arrangement under Sherman Act § 1 requires use of control over a tying product to force purchase of a tied product, with resulting competitive concern in the market where consumers buy the products.
- The “separate products” inquiry turns on consumer demand: separate products exist only if there is sufficient demand to make separate offering efficient and to define a distinct product market.
- Per se condemnation of tying is limited to settings where structural conditions, including market power in the tying product, make anticompetitive forcing and harm likely.
- Absent proof of market power and competitive harm in relevant markets, an exclusive-services arrangement in a hospital setting is not condemned as unlawful tying.

## Conclusion

The Court held that the hospital’s exclusive anesthesiology contract was not unlawful tying under Sherman Act § 1 because the record did not establish market power sufficient to force patients’ choices or any meaningful harm to competition in relevant markets, making per se invalidation improper.


Jefferson Par. Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2 (1984)