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AAI Urges Relegation in Second Circuit FIFA Conspiracy Case (Relevent Sports v. USSF)

AAI has filed an amicus brief asking the Second Circuit Court of Appeals to overturn a district court’s dismissal of conspiracy claims against FIFA and the U.S. Soccer Federation, the world and U.S. governing bodies of soccer, for failure to plead concerted action.

The plaintiff, Relevent Sports, LLC, is a promoter that alleges it was wrongly prevented from hosting “official” Spanish and Ecuadorian professional soccer matches in the United States.  After the Spanish and Ecuadorian leagues and teams, and the countries’ national soccer associations, which are FIFA members, agreed to play official league games in the United States, Relevent alleges that FIFA convened a governance body and implemented a binding, enforceable policy requiring that all official league matches must be played in each league’s host countries.  The plaintiff alleges that the policy, which was articulated in a press release posted on FIFA’s website, is a horizontal geographic market allocation that limits output by preventing foreign competition against domestic soccer leagues.

The district court dismissed the complaint for failure to state a claim on grounds that the plaintiff had failed to allege concerted action.  It held that, notwithstanding that plaintiff pled facts suggesting FIFA’s policy is binding on all national soccer associations and their leagues and teams, plaintiff was required to plead additional facts suggesting that the associations, leagues, and teams “decided to comply” with an unlawful objective in mind, and they “agreed to agree” to implement the challenged policy.

The AAI brief argues that the district court’s pleading requirements contravene substantive antitrust law and effectively immunize the most stable, harmful forms of cartel behavior, where output decisions are ceded to a central decisionmaker.  Supreme Court precedent holds that the concerted action element of a Section 1 claim under the Sherman Act requires only proof that a challenged restraint prevented separate economic actors from pursuing separate economic interests; it does not require proof of the alleged conspirators’ mental states as they went about honoring commercial obligations they were bound to honor.  Concerted action is an objective test that turns on whether competition has been eliminated, not a subjective test that turns on the alleged conspirators’ mental states.

The brief also argues that the court erred by failing to credit direct evidence of concerted action, instead treating public statements evincing the challenged agreement itself as circumstantial evidence that had to be supported by “plus factor” allegations.  The brief argues that if the evidence somehow is not direct evidence, it is unambiguous circumstantial evidence of an actual agreement that should be independently sufficient to establish concerted action.  The plus factor paradigm only makes sense when applied to ambiguous evidence of parallel conduct.

Finally, the brief argues that the district court misapplied language in the Supreme Court’s Monsanto and American Tobacco decisions that require plaintiffs to allege that a challenged restraint is “designed to achieve an unlawful objective.”  The district court interpreted this language to mean that plaintiffs must have subjectively intended to harm competition, but the case law is clear that the unlawful objective to be pled is an anticompetitive market effect.  Intent is not element of proof in a civil Section 1 case, and even in a criminal Section 1 case, general intent to perform the unlawful act is sufficient.  Subjective intent to harm competition is never required.

The brief also warns the Second Circuit that the district court ruling not only departs from decades of Supreme Court precedent, but it would effectively immunize the most durable, stable, and harmful cartel behavior.  Cartels that can cede decisionmaking authority on price or output to a single entity are the most dangerous because they create the ideal mechanism for cartel management by enabling the cartel members to police against defectors who would otherwise “cheat” to the benefit of consumers.

The brief was written by AAI Vice President of Legal Advocacy Randy Stutz, with assistance from AAI Extern Jenna Riddle.  Numerous AAI Advisory Board members, and AAI Vice President of Policy Laura Alexander, provided additional support.

AAI Advisory Board Member Steve Ross, the Lewis H. Vovakis Distinguished Faculty Scholar and Professor of Law at Penn State Law School, and Executive Director of Penn State Center for the Study of Sports in Society, also submitted an amicus brief in support of the plaintiff on behalf of 14 Antitrust, Sports Law, and Economics Professors, including several AAI advisory board members. The U.S. Department of Justice submitted an amicus brief in support of the plaintiff as well.

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AAI Says Joint Ventures Reinforce Market Power in the Domestic Airline Oligopoly, Commends DOJ for Challenging the Northeast Alliance and Urges DOT to Overhaul Regulatory Policy

AAI wrote today to the Secretary of Transportation and Acting Assistant Attorney General for Antitrust on Airline Joint Ventures in the Era of Oligopoly: Realigning Regulatory Policy with Tougher Antitrust Enforcement. The letter focuses on the recent Northeast Alliance (NEA) agreement between American Airlines, Inc. (American) and JetBlue Airways Corporation (JetBlue) but AAI’s analysis and recommendations apply equally to past and future airline joint venture agreements as well. The AAI letter highlights two major issues of concern.

First, airline joint venture agreements like the NEA are now the “go-to” strategy for large carriers, like American, to maintain or expand their market positions. Such agreements also further “tighten” the Big 4 oligopoly that dominates domestic air passenger service markets. Joint venture agreements stop short of mergers, but can nonetheless eliminate the incentive for the parties to the agreement to compete independently, to the detriment of consumers. When layered on top of already oligopolized markets, such agreements act to fortify the Big 4’s (American, United, Delta, and Southwest) hold on domestic markets and can facilitate further anticompetitive coordination on capacity, fares, ancillary fees, and other competitive variables.

Second, DOT perfunctorily approved the NEA, subject to minimal conditions and without providing any opportunity for public comment. This process raises public policy concerns in light of DOJ’s recent lawsuit, joined by seven states, challenging the NEA as illegal under Section 1 of the Sherman Act. The saga of the NEA, and tension between the two federal agencies with competition oversight authority in the airline industry, illustrates the unsustainable misalignment between DOT’s existing regulatory policy toward airline joint ventures and the troubled competitive landscape of domestic air passenger service markets. A major overhaul is needed, consistent with the “whole of government” approach to airline competition that is envisioned in the Biden Administration’s Executive Order on Competition.

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AAI Asks Supreme Court for Common Sense Limits on Antitrust Exemptions for Local Hospital Monopolies (Benitez v. Charlotte-Mecklenburg Hospital Authority)

AAI has joined with 33 antitrust and health policy scholars in urging the U.S. Supreme Court to grant certiorari to overturn a 4th Circuit decision applying an antitrust exemption for “local government” to a multi-state, multi-billion dollar hospital system accused of antitrust violations by the U.S. and North Carolina Departments of Justice.

In Benitez v. The Charlotte-Mecklenburg Hospital Authority, the plaintiffs sought to recover damages from the Charlotte-Mecklenburg Hospital Authority, doing business as Atrium Health (“Atrium”), for allegedly imposing illegal “anti-steering” provisions in insurer contracts that prevent insurers from encouraging patients to seek treatment at more affordable hospitals.  After the DOJ successfully obtained a consent decree prohibiting Atrium’s use of anti-steering provisions, Atrium argued that it was immune from private damages caused by the anti-steering provisions under the Local Government Antitrust Act of 1984 (LGAA), which shields local governments from private damages for antitrust suits.  Notwithstanding that Atrium is a multi-billion-dollar commercial market participant that operates throughout North Carolina and in neighboring states, with annual revenue several times larger than the entire City of Charlotte, the district court held that it was covered by the LGAA as a “special function governmental unit” akin to a local school district or sanitary district, and the Fourth Circuit affirmed.

In their brief in support of certiorari, AAI and 33 antitrust and health policy scholars argue that the Fourth Circuit’s ruling is inconsistent with the Supreme Court’s state-action jurisprudence, which recognizes that immunities from the antitrust laws are disfavored and delegations of government authority to private market participants are viewed skeptically.  Both the plain meaning of LGAA’s text and clear congressional intent suggest the statute was intended to be interpreted in line with the state-action doctrine and not to be automatically extended to non-local market participants.  The brief also emphasizes the well-documented costs associated with declining competition and increasing concentration in local and regional hospital markets throughout the United States, and the risks that the Fourth Circuit opinion creates a playbook for dominant hospitals to evade financial responsibility for antitrust violations and undermine the goals of the Clayton and Sherman Acts.

The brief was written by Jamie Crooks and Alison Newman of Fairmark Partners, LLP, with assistance from AAI Vice President of Legal Advocacy Randy Stutz, AAI Vice President of Policy Laura Alexander, and AAI Advisory Board Member Barak Richman, who is the Edgar P. and Elizabeth C. Bartlett Professor of Law and Business Administration at Duke University School of Law.

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Commentary: Breaking the Market Power Bottleneck in U.S. Beef–A Roadmap for Building an Independent Ranching and Processing Sector

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The Competition Problem in Beef

Every day, ranchers and consumers confront the fallout from decades of massive consolidation in the beef processing segment of the supply chain. Four large meat-packing companies control over 80% of the market. This domestic beef packing cartel has extracted billions of dollars of ill-gotten profits from ranchers and consumers. Moreover, a lack of competition limits ranchers options for selling their products and pushes down the prices they receive for them. At the other end of the supply chain, the cartel raises consumer prices for beef at the grocery store.

The “squeeze” on U.S. ranchers and consumers also comes from standards that allow products to be labeled “Made in the USA,” even if animals are imported from abroad and slaughtered and processed in the U.S. This makes it difficult for smaller, independent ranchers and processors in the U.S. to differentiate their products. The squeeze also prevents consumers from exercising their right to fair prices and quality; but also the right to purchase their beef from a variety of sources, including smaller, innovative U.S. ranchers and processors.

The beef dollar statistics tell a concerning story. Between 1980 and 2020, the retail sector’s share of the beef dollar has grown by about 65%, while the packer’s share increased even more—by over 70%. Over the same period, ranchers’ share of the beef dollar dropped precipitously by about 40%. And since mid-2015, prices for cattle have declined, while the price of retail beef has increased, creating a widening gap. The decline in independent family animal agriculture, driven in large part by consolidation in food and agriculture, has led to the deterioration of the rural U.S. economy.

Signs of Progress

The need to address the high concentration and lack of market competition that has fostered a dire situation in the U.S. beef sector is increasingly recognized at the uppermost political and economic levels. Actionable proposals are badly needed to give smaller ranchers and processors a level playing field to access markets and distribute their products, and ensure that consumers pay fair prices and receive high quality beef products. Strong public and private antitrust enforcement to break the power of the packer cartel is essential. But complementary policy initiatives are also needed to bootstrap enforcement by creating a roadmap for improving market access, increasing geographic diversity, and crafting appropriate “rules of the road” that will foster the growth of an independent ranching and processing sector.

There are currently a number of bipartisan legislative and administrative initiatives designed to remedy the damage from the accretion and exercise of market power in the beef supply chain. Among these initiatives are: a rulemaking that would reestablish and reinvigorate the Packers and Stockyards Act (PSA) of 1921; a legislative proposal to provide for much stronger enforcement of the PSA; an Executive Order that includes incentives to expand independent meat processing; proposed measures to increase contracting and market pricing transparency; and congressional pressure for a U.S. Department of Justice (DOJ) investigation of anticompetitive conduct by the major meat packers.

policy goals that promote competition

The breadth and depth of advocacy in food and agriculture is significant. Advocacy groups focus on a host of issues, including antitrust enforcement and competition policy, the role of farmers and rural communities, fairness to consumers, independent food systems, and food security. OCM and AAI encourage an integrated policy approach to support the growth of a competitive and independent ranching and processing sector. This includes vigorous antitrust enforcement, pro-competitive regulation, and constructive legislation. Policies designed to promote the growth and stability of such a sector include, but are not limited to:

  • Antitrust enforcement against the 4-firm oligopoly that dominates the processing segment of the beef supply chain and revisiting merger enforcement policy in retail grocery
  • Improving market access through pricing reforms and increased transparency
  • Scrutinizing the anticompetitive incentives associated with concentrated packer integration into cattle supply and conduct designed to exclude smaller ranchers and processors
  • Product labeling that promotes independent suppliers’ ability to differentiate the quality/origin of their beef and consumers’ right to choose
  • Food inspection processes that differentiate large scale v. smaller scale processing plants based on scale and efficiency
  • Supplier diversity as a goal of government food procurement policy
  • Consumer education on the importance of diversity and resiliency in the beef supply chain

The foregoing goals, and policies needed to achieve them are fundamentally more ambitious than simply improving access to existing markets through subsidies and lowering the transactions costs experienced by smaller producers. Rather, they are designed to inject needed competition to support the diversification of the highly bottlenecked beef supply chain we see in the U.S. today. These goals, taken together, would better promote competition through the aggregate impact of smaller ranchers and processors; spur the growth of new regional markets for differentiated products—including high quality domestic (or made in the USA) beef; and support the development of a more resilient supply chain that incorporates multiple channels to the consumer. Needless to say, such competition would promote the livability of the rural U.S. and durability of the family farm and ranch. OCM and AAI strongly endorse keeping these goals at the top of the Biden Administration’s antitrust enforcement and USDA policy agenda.

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AAI Asks En Banc Ninth Circuit to Consider Both Core Antitrust Policies and Practical Realities in Enumerating Rule 23 Standards for Antitrust Class Actions (Olean v. Bumble Bee)

AAI submitted an amicus brief urging the En Banc Ninth Circuit Court of Appeals to reject a defense proposal seeking to ratchet up the Rule 23 standard for establishing predominance in antitrust class actions.

In Olean Wholesale Grocery Cooperative, Inc. v. Bumble Bee Foods, LLC, a district court certified three classes of purchasers, including direct purchasers and two groups of indirect purchasers, seeking to recover for the confessed price fixing of the three leading producers of packaged tuna, Bumble Bee Foods LLC, Starkist, and Chicken of the Sea.  The defendants had either sought leniency or pled guilty after a Department of Justice Investigation, and several of their executives have been sentenced to prison.

Unable to contest liability given their admissions, the defendants focused extensive resources and attention on defeating class certification.  In district court proceedings, they introduced rebuttal experts seeking to counter plaintiffs’ economic experts, which had introduced statistical analysis attempting to show that the price fixing caused widespread injury across the respective classes.  The district court, after a three-day evidentiary hearing, found plaintiffs’ experts more persuasive and held that the plaintiffs’ common statistical evidence of impact was sufficient to help satisfy Rule 23’s predominance requirement, though it allowed that defendants could still challenge the admissibility and probative value of the common statistical evidence at trial.

On interlocutory appeal, the defendants, supported by the U.S. Chamber of Commerce and the Washington Legal Foundation, argued that the district court erred by refusing to definitively resolve the battle of the experts at class certification, and that plaintiffs’ expert statistical analysis was inherently problematic because it relied on the average overcharges to the classes, thereby masking the possibility that some of the class members were uninjured by the price fixing.  The defendants maintained that, because plaintiffs’ expert evidence could not necessarily sustain a jury finding for every class member, it should not be a permissible means of establishing that common questions would predominate at a class trial.

In an amicus brief submitted last August, AAI argued that such evidence need only be relevant and reliable to be admissible; it does not have to assure that each plaintiff would prevail on the merits of the impact element in an individual action. Rule 23 requires only that common “questions” must predominate over individual questions at trial; it cannot be read to suggest that the questions’ answers must be determined to permit class certification. Moreover, any uninjured class members may be identified after trial, and longstanding case law prevents defendants from capitalizing on the uncertainty created by their own illegal conduct, including uncertain damages calculations.

The AAI brief also argued that the court should unequivocally reject the defendants’ effort to cast categorical doubt on statistical analysis, and specifically regression modelling, in antitrust cases.  Regression models frequently rely on averaging techniques, but that is not where they begin and end.  Such models are routinely accepted as reliable methods of proving widespread injury to antitrust classes because econometric techniques can control for price changes caused by supply and demand factors and then focus on the uniformity of differences across class members to reliably show common impact.

All three judges on the merits panel adopted the position advocated by AAI in rejecting defendants’ categorical arguments on the use of statistical analysis and regression modeling to prove class-wide impact in antitrust cases.  However, the three judges sided with defendants in holding that the district court erred by refusing to resolve the disagreement among the parties’ experts over the number of potentially uninjured members in the class.  And the panel then split over the standard for determining whether the presence of uninjured class members may defeat predominance.  The panel majority concluded that the district court, before certifying a class, must find that only a “de minimis” number of class members are uninjured. Judge Hurwitz, partially dissenting, maintained that neither the text of Rule 23 nor Ninth Circuit precedent permit the court to implement such a requirement.

In the aftermath of the panel opinion and partial dissent, neither party petitioned for panel or en banc rehearing, instead agreeing to accept remand. But on April 28, the Court sua sponte ordered briefing on whether en banc hearing is warranted and directed the parties to focus on the “de miminis” issue that divided the panel.  AAI filed a second amicus brief arguing that en banc rehearing was warranted to correct the panel majority’s unduly rigid “de minimis rule” because it would undermine the efficacy of private antitrust class actions.  On August 3, 2021, the en banc court granted rehearing.

AAI’s newest brief, which addresses the merits before the en banc Court, argues that the defendants’ proposed predominance standard would undermine antitrust policy while contravening Supreme Court precedent, Ninth Circuit precedent, and the text of Rule 23.  The brief emphasizes, first, that defendants’ proposed de minimis standard is inappropriate because, in many cases, common issues will predominate regardless of whether more than a de minimis percentage of class members were uninjured. Second, a de minimis rule does not follow from Article III standing doctrine, which is jurisdictional.  Federal courts do not need to determine whether injury has occurred on the merits to determine whether they have the power to adjudicate the issue of injury.  Third, Rule 23 does not require merits determinations, or resolving the battle of the experts, to assess whether class plaintiffs are capable of establishing injury using common evidence.  According to binding precedent, plaintiffs’ evidence is sufficient if it could sustain a jury verdict.

The brief was written by Professor and AAI Board Member Joshua Davis of the University of San Francisco Law School and AAI Vice President of Legal Advocacy Randy Stutz.  Numerous AAI Advisory Board members also provided guidance and feedback.

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AAI and Public Knowledge Team Up to Urge DOJ to Carefully Scrutinize Mergers in Media/Entertainment and Distribution: New Analysis Reveals Multiple Challenges to Competition and the Failure of Past Mergers to Prove Up Benefits

The American Antitrust Institute (AAI) and Public Knowledge (PK) sent a letter to the U.S. Department of Justice, urging the acting leadership of the Antitrust Division to consider key issues relating to merger review involving the media/entertainment (“content”) and content distribution markets.

The letter presents in-depth analysis of strategic consolidation, market power, and efficiencies in the content and distribution markets. The letter was penned by both AAI and PK, organizations that have long advocated for strong antitrust enforcement and policies designed to promote competition and protect consumers and workers. The letter provides analysis of the changing competitive landscapes of markets for content and distribution, with direct implications for the review of current and future mergers–most immediately the proposed merger of leading content companies WarnerMedia and Discovery, which is under review at DOJ.

The letter provides important context for major structural and technological transition in the video marketplace and addresses two major issues: (1) competition challenges in the video streaming markets and their implications for antitrust enforcement; and (2) lessons learned from unfounded claims that previous content and distribution mergers would generate significant short-term and long-term efficiencies.

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A Conversation with Competition Experts William Baer and Frederic Jenny: Enforcement and Policy Issues in the International Arena

In this episode, two the world’s leading competition experts, William Baer and Frederic Jenny, have a one-on-one conversation about key issues in the international competition arena that should be front and center on the enforcement and policy radar screens. The exchange took place at AAI’s 22nd annual policy conference in June 2021. AAI is delighted to provide access to it on Ruled by Reason. Baer and Jenny cover topics ranging from legislative and institutional responses to big tech concerns, to the intersection of antitrust and regulation, substantive and procedural convergence, competition policy versus industrial policy, and incorporation of “non-competition” values into competition law. The unique perspective revealed in their conversation comes at a critical time, where concerns over declining competition and concentrated market power are high on the enforcement and policy agendas of enforcement authorities across the globe.

MODERATOR:
Diana Moss, President, American Antitrust Institute

Guests:
William Baer, Former Assistant Attorney General for the Department of Justice Antitrust Division; Visiting Fellow, Governance Studies, The Brookings Institution
Frederic Jenny is Professor of Economics, ESSEC Business School, Paris and Chairman, Competition Committee, OECD

 

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Antitrust Experts Review New Data on Private U.S. Antitrust Enforcement, Identify Trends That Must Be Reversed For Private Enforcement to Fulfill Its Increasingly Vital Role

The American Antitrust Institute and Professor Joshua P. Davis at USF Law have released a Commentary on the 2020 Antitrust Annual Report: Class Action Filings in Federal Court (2020 Report). The goal of the Commentary, The Critical Role of Private Antitrust Enforcement in the United States, is to identify major implications for private enforcement in the U.S. Like the 2018 and 2019 Reports, the 2020 Report relies largely on data for private U.S. antitrust class actions available through Lex Machina, as well as supplemental data analysis. The 2020 Report extends the dataset to the eleven-year period covering 2009-2020, thus allowing for a deeper analysis of private enforcement trends and their implications. The analysis provided in the AAI-USF Commentary highlights the importance of private antitrust enforcement in the U.S. system and the particularly important role played by the antitrust class action.

The Commentary explains that the 2020 Report provides further evidence of a divergence between public and private enforcement trends. As public enforcement has waned, private filings have waxed, undermining the notion that class actions simply ride the coattails of public enforcement. On the contrary, the data suggest that as lax public enforcement fosters higher market concentration and invites bad behavior, private filings may compensate for under enforcement in an effort to address the resulting antitrust violations.

Looking beyond the number of enforcement actions filed and focusing on the results of the actions, the data on which the 2020 Report are based reveal more nuance to the foregoing narrative. Despite increased private actions in the face of decreased public enforcement, the amount of money recovered from violators by both public and private enforcers has diminished. For public enforcers, this diminution is to be expected, as fewer cases have been brought. For private enforcers, though, the explanation likely lies with other trends, most notably the increasing headwinds faced by private enforcers due to heightened pleading and class certification standards. If these explanations are correct, the clear implication is that for private enforcement to fulfill its increasingly vital role as a complement and a backstop to public enforcement, these trends must be reversed.

A theme highlighted in the AAI-USF commentary on the 2019 Report, and that continues to feature in the 2020 Report, is the tremendous variability in the data on some measures related to settlement size. Aggregate settlement amounts over the period vary widely from year to year. By disaggregating the settlements by size, however, it is clear that settlements at different levels trend somewhat independently. Very large settlements, which are few in number, drive most of the variability in the aggregate data. But trends and anomalies in very small settlements cannot be entirely discounted, as they are the force behind one of the highest recovery years in the period, 2018.

Finally, building on analysis from the AAI-USF 2019 commentary, the 2020 Commentary takes a deeper dive on attorneys’ fees and how they correspond to settlement amounts. AAI-USF findings reinforce the tentative conclusion from last year’s analysis that the so-called “megafund doctrine”—a dramatic decrease in attorneys fee percentages on settlements above a threshold of about $100 million—does not operate in federal antitrust cases in a significant way. Rather, decreases in the fee award percentage in antitrust cases are not discrete and drastic, but rather gradual, much like marginal tax rates in the United States.

The AAI-USF Commentary on the 2020 Report discusses each of the above observations in more detail and provides analysis of their implications for private enforcement, many of which suggest fertile areas for additional study.

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Based in Washington, D.C., the American Antitrust Institute is an independent, nonprofit organization devoted to promoting competition that protects consumers, businesses, and society. It serves the public through research, education, and advocacy on the benefits of competition and the use of antitrust enforcement as a vital component of national and international competition policy.

Founded in 1912, the University of San Francisco School of Law provides a rigorous education – from intellectual property law to litigation and more — with a global perspective in a diverse, supportive community.   It is fully accredited by the American Bar Association and a member of the Association of American Law Schools.

 

For more information, contact:

Diana Moss, President, American Antitrust Institute
720-233-5971
dmoss@antitrustinstitute.org

Joshua Paul Davis, Professor of Law, University of San Francisco School of Law
415-422-6223
davisj@usfca.edu

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Private Equity and Competition: How Private Equity Drives Consolidation and Undermines Market Stability while Flying Under the Antitrust Enforcement Radar

In this episode, AAI Vice President of Policy Laura Alexander and Patrick Woodall, Senior Researcher at Americans for Financial Reform, discuss the impact of private equity investment on competition, consumers, and communities.  This discussion was inspired by a recent report on private equity from AAI and the Petris Center, Soaring Private Equity Investment in the Healthcare Sector: Consolidation Accelerated, Competition Undermined, and Patients at Risk. Beginning with the unique structure and financial incentives of private equity funds, and the resulting investment strategies, the discussion quickly turns to the consequences of those investment strategies.  Laura and Patrick discuss how private equity funds avoid antitrust scrutiny by using “buy-and-build” and “roll-up” strategies, and why existing antitrust law is insufficient to address many of the anticompetitive effects of private equity investment.  The episode concludes with a discussion of potential legislative and policy changes that could be used to curb private equity abuses.

 

MODERATOR:
Laura Alexander, Vice President of Policy, American Antitrust Institute
GUESTS:
Patrick Woodall, Senior Researcher, Americans for Financial Reform

 

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AAI Op-Ed Makes the Case for Antitrust Scrutiny of Private-Equity-Driven Hospital Consolidation

In an op-ed in Milbank Quarterly Opinion, AAI’s Laura Alexander and Professor Richard Scheffler of The Nicholas C. Petris Center on Health Care Markets and Consumer Welfare in the School of Public Health at UC Berkeley build on their recent study, Soaring Private Equity Investment in the Healthcare Sector: Consolidation Accelerated, Competition Undermined, and Patients at Risk, to argue for immediate action to address a coming wave of private equity investment that threatens further consolidation in the already troubled hospital sector.

The authors explain how private equity funds build market power and undermine market stability, largely without scrutiny by antitrust or financial regulators, how this threatens patients and markets, and how the COVID-19 pandemic made things worse. They conclude that additional scrutiny and immediate regulatory action are needed before private equity funds unleash on healthcare markets the large stores of dry powder they have built up during the pandemic.

Read the Op-Ed.