In 2022, the Department of Justice (“DOJ”) successfully continued its pursuit of antitrust litigation against violators with more favorable court rulings than in recent history. Historically, regulators had limited success litigating antitrust enforcement before the courts. The Biden administration’s agenda prioritized antitrust enforcement by hiring more antitrust lawyers. The administration’s efforts include prosecuting “no-poach” agreements or other wage-fixing schemes, going after the board of directors who serve on competing organizations, or regulating other monopolies and colluding activities by corporations.

The DOJ and Federal Trade Commission (“FTC”) triumphed litigating various industries and economic sectors from the publishing press to health care. The FTC successfully enjoined four hospital mergers in the health care sphere and plans to continue limiting further consolidations. Hospital merger arguments traditionally focused on improving efficiency, reducing costs, and providing savings that can be passed onto consumers. However, federal regulators argue that these mergers enable the creation of super conglomerates which have driven up U.S. health care expenditures that are the highest in the world.

The Biden administration tasked the FTC and DOJ to investigate merger activity in this space because merger and acquisition activity has now resulted in ten of the largest health care systems controlling over 25% of the market. This activity led to hospital closures in rural or underrepresented areas. These actions are a part of the overall strategy to use antitrust laws to regulate industries that evaded regulatory oversight over the past few decades.

It is worth noting that this aggressive enforcement strategy has been in effect since 2022. Four cases exemplify this point. First, the FTC halted RWJBarnabas Health’s proposed acquisition of St. Peter’s Healthcare System in New Jersey after citing concerns about increased prices and decreased quality of patient care. Second, the FTC’s hindrance in HCA Healthcare’s (which operates 182 hospitals) attempted acquisition of five Steward Healthcare System facilities in Utah, resulted in HCA unsuccessfully being able to merge. Third, the FTC’s willingness to procure an injunction ultimately persuaded Hackensack Meridian Health and Englewood Healthcare Foundation from merging. Finally, the FTC triumphed by preventing Rhode Island’s two largest hospital systems, Lifespan and Care New England Health System from pursuing their merger.

This winning streak emboldened the Executive Branch to push forward with increasing regulatory and litigation activities. In August 2022, the Federal Trade Commission warned states that issuing Certificates of Public Advantage (“COPA”), which allow states to oversee hospitals’ consolidation activities and therefore shield these entities from federal antitrust laws, is detrimental to consumers. The regulators warned that merger activities under the purview of a state COPA agreement result in higher prices, reduced quality outcomes, negative patient care, and lower worker wages. The agency’s direct warning to the states and the public suggests that two or more entities seeking to merge or consolidate find the COPA arrangement a tantalizing option to avert federal antitrust regulation. Considering these recent shifts in regulatory strategy, this paper considers the role of COPAs in the context of competition and antitrust law. The scope of this paper focuses on the horizontal mergers of hospitals through a brief discussion on the types of antitrust activities regulated under federal antitrust law outlined in the background section to provide context for the comprehensive purview of federal antitrust enforcement.

Part II of this paper provides a brief primer on key federal antitrust laws and regulations. First, I list the key statutes governing federal antitrust enforcement. These include the Sherman Act, Clayton Act, and the Federal Trade Commission Act. Next, I describe dual-level enforcement when considering state-level regulatory oversight. I set the background for this tension created by federal versus state preemption that plays a role in the justification for COPA exemptions discussed in Part IV.

Part III focuses on the real-world regulatory landscape of antitrust enforcement. The first half of the section focuses on the enforcement strategies of the Department of Justice and the Federal Trade Commission using their agenda and policy statement publications. The latter half of the section considers what types of actions are not regulated or litigated. For instance, the FTC has its interpretation of what merger activities they choose not to regulate as a matter of policy by carving out safety zones offering exemptions to merger regulations.

Part IV of this paper concentrates on a type of antitrust exemption mechanism central to considerable controversy in the current climate: certificates of public advantage (COPA). Federal regulators are targeting this regulatory scheme in which states can preempt federal antitrust laws by offering to regulate the merged entities themselves. This creates tension between states and the federal government. What policy values should be prioritized against antitrust enforcement? Does a state’s right to control the public health and welfare of its residents preempt the need to maintain competitive markets to protect consumer interests?

This segment of the paper defines what COPAs are and provides a survey of state-level COPAs in the nineteen jurisdictions where COPAs are recognized and some key features of them. This exhibits that the piecemeal approach to these state-specific agreements yields nonuniformity or unclarity on expectations and standards. Next, I discuss the federal regulatory perspective and their current enforcement strategy for targeting these COPA agreements. Finally, Part V concludes with criticisms of COPAs by assessing the consequences of COPAs that ultimately failed and were subsequently repealed. Next, I highlight the need for uniform standards and efficiency considerations. I end by providing some examples of novel solutions and schemes that could be used to achieve a more reasonable outcome.