FTC v. Phoebe Putney Health System, Inc.

Facts

Georgia amended its Constitution to allow political subdivisions to provide health care services. The State also enacted the Hospital Authorities Law. The purpose of the constitutional provision and the statute was to create an organization which could carry out and make more workable the duty which the State owed to its indigent sick. A county or municipality may create “a public body corporate and politic” called a “hospital authority.” A hospital authority was delegated “all the powers necessary or convenient to carry out and effectuate” the Law's purposes. The city of Albany and Dougherty County established the Hospital Authority of Albany-Dougherty County (D), and the Authority promptly acquired Phoebe Putney Memorial Hospital (Memorial), which has been in operation in Albany since 1911. Memorial is one of two hospitals in Dougherty County. The second, Palmyra Medical Center (Palmyra), was established in Albany in 1971 and is located just two miles from Memorial. Memorial and Palmyra account for 86 percent of the market for acute-care hospital services provided to commercial health care plans and their customers in the six counties surrounding Albany. Memorial accounts for 75 percent of that market on its own. D offered to purchase Palmyra. P issued an administrative complaint alleging that the proposed purchase-and-lease transaction would create a virtual monopoly and would substantially reduce competition in the market for acute-care hospital services, in violation of § 5 of the Federal Trade Commission Act. The District Court denied a request for a preliminary injunction and granted D's motion to dismiss. The District Court held that Ds are immune from antitrust liability under the state-action doctrine. The Court of Appeals affirmed. The Court of Appeals concluded that the Law contemplated the anticompetitive conduct challenged by P.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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