## Facts

- In 1990, Dominican Santa Cruz Hospital (Dominican) acquired AMI Community Hospital of Santa Cruz (AMI).
- Soon after the acquisition, Dominican stopped operating AMI as an acute-care hospital and instead provided subacute services, such as rehabilitation.
- Santa Cruz Medical (plaintiff) was a partnership of physicians and medical practitioners practicing in the Santa Cruz area.
- Plaintiff sued Dominican in federal court, alleging the acquisition violated § 7 of the Clayton Act by creating or increasing concentration in hospital services.
- Plaintiff’s § 7 theory depended on defining the relevant product market as acute-care inpatient hospital services and the relevant geographic market as Santa Cruz County.
- Dominican disputed that the acquisition was anticompetitive and argued for broader market definitions.
- On product market, Dominican contended the market included inpatient and outpatient hospital services and included alternatives such as rehabilitation facilities and nursing homes.
- On geographic market, Dominican contended the market extended beyond Santa Cruz County to include Santa Clara County and Northern Monterey County.
- In 1995, plaintiff moved for summary judgment on its antitrust theories challenging the acquisition.

## Issues

1. Whether, on summary judgment, the court could determine the relevant product and geographic markets for plaintiff’s Clayton Act § 7 challenge to Dominican’s acquisition of AMI.
2. Whether the summary-judgment record established, as a matter of law, that the acquisition may substantially lessen competition under Clayton Act § 7.
3. Whether plaintiff was entitled to summary judgment on its related Sherman Act § 1 and § 2 theories tied to the acquisition.

## Decision

- The court declined to resolve the case entirely at the summary-judgment stage.
- The court found genuine disputes of material fact on market definition and competitive effects, preventing summary judgment that would finally decide the merger’s legality.
- The court’s ruling allowed at least some portion of plaintiff’s antitrust case to proceed beyond summary judgment.

## Legal Principles

- Under Clayton Act § 7, merger analysis depends on properly defined relevant product and geographic markets and an assessment of likely competitive effects within those markets.
- Market definition in hospital cases commonly turns on fact questions about substitutability (including whether non-hospital facilities constrain hospital pricing) and patient and payer behavior.
- Summary judgment is inappropriate when competing evidence would allow a reasonable factfinder to choose between rival market definitions or to draw competing inferences about competitive effects.
- A party seeking summary judgment bears the burden to show there is no genuine dispute of material fact and that it is entitled to judgment as a matter of law; where market definition is contested on the record, that burden is difficult to meet.

## Conclusion

Santa Cruz Medical challenged Dominican’s acquisition of AMI as anticompetitive, but the court determined that disputed facts about the proper product and geographic markets—and what those markets meant for competitive effects—prevented a final merits resolution on summary judgment, leaving at least part of the antitrust case to continue.


Santa Cruz Medical v. Dominican Santa Cruz Hospital, 1995-2 Trade Cases ¶ 71,254