Hospital Corp. Of America v. FTC

807 F.2d 1381 (1986)

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Nature of the Case

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Facts

D is the largest proprietary hospital chain in the United States. In 1981 and 1982 it acquired two corporations, Hospital Affiliates International, Inc. and Health Care Corporation. Before these acquisitions, D had owned one hospital in Chattanooga, Tennessee. It also assumed contracts, both with four-year terms, that Hospital Affiliates International had made to manage two other Chattanooga-area hospitals. After the acquisitions, D owned or managed 5 of the 11 hospitals in the area. The acquisitions raised D's market share in the Chattanooga area from 14 percent to 26 percent. This made it the second largest provider of hospital services in a highly-concentrated market where the four largest firms together had a 91 percent market share compared to 79 percent before the acquisitions. The FTC (P) held the acquisitions to be a violation of §7. The administrative law judge concluded that the acquisitions violated section 7 because of their probable anticompetitive effects in the Chattanooga hospital market. The Commission agreed that the acquisitions were unlawful and ordered D to divest the hospitals acquired in Chattanooga and to notify the Commission, in advance, of any similar acquisitions planned for anywhere in the country. D sought judicial review of the Commission's order. D makes three arguments: there is no reasonable probability that its acquisitions in Chattanooga will lessen competition substantially; anyway, P has no constitutional power to bring an enforcement action, because the members of the Commission do not serve at the pleasure of the President; failing all else, D should at least not be required to give the Commission advance notice of all future acquisitions.