Peter Herrick, Partner, Axinn Veltrop & Harkrider LLP, speaks with Subramaniam Ramanarayanan, Managing Director, Nera Economic Consulting, and Christine White, Vice President, Office of Legal Affairs, Northwell Health, about some of the key antitrust highlights and takeaways from AHLA’s 2022 Health Care Transactions Program in Nashville, TN. They discuss the recent Lifespan/Care New England transaction in Rhode Island, challenges for merging parties considering some of the new antitrust theories, practical considerations in light of changes to the FTC’s review process, and the new wave of antitrust legislation. Sponsored by Axinn.
To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.
Peter Herrick, Partner, Axinn Veltrop & Harkrider LLP, speaks with Subramaniam Ramanarayanan, Managing Director, Nera Economic Consulting, and Christine White, Vice President, Office of Legal Affairs, Northwell Health, about some of the key antitrust highlights and takeaways from AHLA’s 2022 Health Care Transactions Program in Nashville, TN. They discuss the recent Lifespan/Care New England transaction in Rhode Island, challenges for merging parties considering some of the new antitrust theories, practical considerations in light of changes to the FTC’s review process, and the new wave of antitrust legislation. Sponsored by Axinn.
To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.
Support for ALA comes from action, which brings unmatched depth in the skills needed to address healthcare, collaboration, and competition. They are one of the best known antitrust firms in the world. With more than 60 full-time competition lawyers, they represent companies across the healthcare universe and help clients avoid antitrust landmines, complete mission, critical deals and protect their interests and litigation and investigations from our information. Visit aon.com
Speaker 2:First. Uh, I would like to thank the ALA for putting on this podcast and inviting us to participate. Uh, a few weeks ago, the, a HLA hosted its annual healthcare transactions conference in Nashville and unsurprisingly antitrust was a very hot topic of conversation. Our goal today is to touch on some of the antitrust highlights and key takeaways from the conference. Uh, today I am joined by two very distinguished guests who I will let introduce themselves, uh, to kick things off. I'm Peter Harrick. I'm a partner in the New York office of Axim Bero and heart rider, where I focus primarily on antitrust deal, work and litigation with an emphasis on healthcare. Uh, before going into private practice, I was senior trial counsel at the FTC and a staff attorney in the mergers four division, uh, which is the group that typically, uh, reviews healthcare provider mergers. Uh, I'll also be pulling double duty today, uh, seeing the discussion and hopefully contributing a little bit as well. Uh, Susan and Chris, uh, can you introduce yourselves?
Speaker 3:Sure. I'll, I'll start. Um, hello everyone. I'm Sabu Ram. Uh, I am an antitrust economist. I work at Nera economic consulting. I chair Nera healthcare and I trusts practice. Um, a lot of my work focuses on, um, economic analysis of healthcare transactions, particularly provider transactions. Um, and then on the, on top of that, I do some work on healthcare and I trust issues on the litigation side as well. Um, um, so thanks to Pete, you know, Chris for inviting me to be part of this podcast and, uh, looking forward to participating,
Speaker 4:Thanks hub I'm Chris white and I'm a vice president in the office of legal affairs here at Northwell health, where I also serve as secretary and general counsel for the Northwell health ACO, the cancer Institute, and a couple of our other subsidiary entities. Additionally, I'm a member of the board of directors of the American health lawyers association, and it's really a pleasure to be here today. I've followed antitrust for a long time since starting as an attorney at the federal trade commission many decade ago. So, um, I appreciate being here today and any opinions I may offer are solely my own. Thank you.
Speaker 2:Thanks Kristen SBU. And I should add that, uh, the same goes for me. Uh, any opinions I express are my own. Um, so, uh, there's a lot of ground we could cover. Um, I think I would like to start in Rhode Island, uh, which is a state that had a recent deal involving lifespan and Karen new England. Uh, and during the conference we heard from Steven za in the Rhode Island attorney General's office, um, about that deal. Uh, the deal was challenged after a long investigation, uh, challenged by both the FTC and the Rhode Island ag, uh, and ultimately after the complaint was filed, the parties abandoned the transaction. Um, so I'm gonna put suebu on the spot here a little bit. Um, I I'm interested suebu, you know, if, if you could give us your thoughts on some important takeaways from that deal and, and don't worry, Chris, I'm, I'm not gonna leave you out.
Speaker 3:Sure. Happy to start. Um, so I think there were a couple of things which stood out to me as an outsider. So, you know, looking at, uh, the way the, uh, the complaint was structured by the FPC, as well as the Rhode Island AGS office first, it was clear that, you know, there was a, a thorough independent investigation carried out by the island ag who seemed to have their own expert economic expert who undertook a fairly detailed analysis, um, uh, looking at the potential antitrust issues, um, in addition to, you know, whatever analysis system economist, presumably the FPC was using and relying on. So that to me sort of stood out as to just the, the depth and the depth of the analysis and the investigation that was undertaken by the attorney General's office. Um, I think that in itself was, was not worthy for me again, as an observer, um, then coming to the substance itself. Um, I think there, there were a couple of, um, areas that, that stood out, uh, in, you know, the discussion in the complaint, as well as, uh, in the Rhode eighties presentation about, you know, their, uh, views and analysis of this matter. I think one was, uh, you know, if you look at the, the way the FPC brought the complaint, the focus was on, you know, inpatient general acute care services, as, you know, the set of services that were of concern, um, the ag, uh, and you know, their expert and their office focused on a much broader set of services. So it was not just inpatient care. It was, uh, behavioral health. It was, uh, you know, a lot of outpatient surgical services. So just the set of services that were considered as part of the analysis and as part of the complaint, that was something which was not worthy from the substance point of view for me. Um, I think the other aspect of it was also the focus on labor markets. So, uh, here, you know, the Rhode Island ag, uh, in their discussion focused on, uh, their concerns about how this transaction could impact, uh, or could adversely impact the market for labor when it comes to registered nurses, um, you know, how it might, you know, press employment or, um, uh, compensation for, for the, for these workers. Um, now the FTC itself did not, uh, you know, uh, uh, bring a cause of action centered around labor market issues. There was this interesting divide between the commissioners, um, and I'm sure, you know, Chris will have more to say about it. Um, but it was clear that, you know, labor market issues, it is becoming clear that such issues are going to be of gonna be, you know, a lot of interest going forward as well. And it was fairly, you know, a key idea of concern here, both for the ad's office, as well as for the FTC from,
Speaker 2:Thanks, Chris. Any, any thoughts? I know this is an area, uh, near and dear to your, uh, your client
Speaker 4:Yes. Near and dear to me as a native Rhode Island as well.<laugh> um, and I, I just wanna add a plug if, um, there are folks who have not heard Steven Provo's keynote from the transaction program and encourage you to go back and listen to the recording. He, his presentation was really substantive, really informative, and I think it's worth listening to firsthand, but to follow up on some of, um, Subaru's excellent comments, um, in terms of, for example, the, the depth and the substance of the state of Rhode Island's antitrust investigation. One thing that Mr PZA, um, underscored is that states like Rhode Island are requiring the transaction parties to pay for the state to retain outside experts, law firms, economists financial consultants, healthcare consultants. So they're getting a lot of assistance in the review, and of course the transacting parties are paying for this. So that's still something that parties should know going into the transaction. Additionally, in terms of the substantive review, super did a great job of outlining the ways in which the state of Rhode Island explored some more innovative or different markets that what we've seen coming out of the FTC historically, uh, Steven Prova, I think did a pretty good job of explaining that as the state AGS have been devoting more and more resources to healthcare and healthcare transactions, they're getting more interested in the area. And it means that they're willing to, um, scrutinize markets, I think more broadly and, and somewhat more creatively. He made the point that on the one hand, the state AGS office worked very closely with the FTC and they were very collaborative. On the other hand, I think he felt that the EEGs office was fairly independent. Um, and that is part of what led to their identifying for markets that were not identified in the FTCs complaint. And then finally, I just wanted to comment in terms of the, um, labor markets, where the Rhode Island ag put a lot of time and attention. And of course, FTC chair, con and commissioner father issued a separate statement indicating that they would have supported a labor market allocation if they felt that the other commissioners would've supported that boat. I think there's an expectation that with the new commissioner commissioner pad doya labor markets will be increasingly important in healthcare transactions going forward. So that's something to watch for.
Speaker 2:Yeah. And I, I agree a hundred percent, um, with, with, um, both of your comments. I, I think one of the things that jumped out at me, uh, picking up on, um, Chris's observation is that, you know, uh, Steven was very clear about his belief that states can and will continue to chart their own course on healthcare transactions. Um, and not all states will be the same. Uh, each state will have its own idiosyncratic rules. They will have their own, um, areas of focus and interest. Uh, so it, it will not be a one size fits all, but, you know, it'll be very important for, uh, practitioners advising, um, merging parties to take this into account. Um, it's not just the FTC that you have to think about. Uh, each state could have its own interest in, in your deal. Um, and some states as we've seen are pretty aggressive, uh, when it comes to enforcement. Another thing that that I thought was, um, very interesting, and you don't typically see with the FTC is a focus on non-commercial markets, uh, by the, uh, by the Rhode Island ag, the Medicare and Medicaid that is, um, you know, pretty much outside the playbook of the FTC. The FTC usually focuses on loss of bargaining leverage between on the one hand emerging parties and, or, you know, a change in bargaining leverage between on the one hand of emerging parties. And on the other hand, commercial payers, uh, but Rhode Island was focused on a loss of quality competition, which could affect Medicare patients. Uh, so I thought that was quite interesting. Um, the last thing that he mentioned that I thought was important for merging parties to keep in mind as more, it seems more ministerial, but it could be important is that a state might not, not have the same confidentiality protections that the FTC employs. Uh, so you really do wanna look at that. Um, because needless to say, you don't want your, um, trade secrets or, you know, very confidential information out in the public eye. So just some things to keep in mind, uh, for, for all the practitioners out there who are thinking about, you know, how do I approach a deal that where a state ag could be really interested, uh, in the transaction. And I think that segues, uh, nicely into a second topic that, um, we wanted to talk about today, which are some of the new antitrust theories that, uh, have been talked about. And in the case of, uh, um, Karen England, uh, were actually alleged by, um, well, almost alleged, I guess you could say by, uh, the FCC, uh, and you know, the panel on new antitrust theories covered a variety of new and challenging issues, um, as antitrust agencies, uh, look to expand the kinds of topics and, and areas that are investigating, um, since that was Chris's panel, um, I'm gonna give her a little bit of a break<laugh>. Um, uh, and so my next question is gonna really start with suebu is, and, you know, as an economist, um, where do you see the biggest challenges for, for emerging parties in light of the new antitrust theories that, that we hear so much about labor markets you mentioned, but also cross market effects and, and other sort of hot topic, uh, for the antitrust agencies.
Speaker 3:Sure. Um, I think in working with a lot of, you know, merging parties on these transactions and, you know, engaging with the agencies, both federal and state agencies, I think there are a couple of, you know, challenges when we think about, um, you know, for parties considering a deal in the context of these sort of new antitrust theories. I think the first is just this sort of shift in focus to what I would say are more non-traditional theories. I mean, some of these theories have been, you know, around for a while. Um, but some of these are gaining more prominence now. Um, and so these would include things like, you know, focus on labor markets, for example, you know, is there a harm in competition on the, on, you know, on the labor side? Um, so that's sort of one stream of, or one type of theory that is getting more focus. Um, it has been examined in the past occasion in healthcare transactions, but it certainly risen to a new level of prominence. Now, um, a second type of theory is what are called cross market effects. These are, you know, types of, uh, transactions where even if you have two merging, you know, health systems, not serving patients in the same geography, uh, is there a theory of harm that could still arise when these two health systems are contemplating a transaction? So, um, that's, um, again, this is a fairly, I would say it's a fairly new theory of harm that's, you know, gaining prominence. Uh, and then of course there are other types of issues that may come up in more complex transactions, you know, like vertical transactions. For example, if you have a hospital buying a physician practice or insurer aligning with the hospital, what, how are, you know, such transactions, you know, evaluated? So there are a lot of these sort of nontraditional theories upon meaning, uh, focused on non horizontal effects, which, uh, are increasingly coming up as part of, you know, these, these transaction reviews. Um, I think in terms of what challenges they bring up, I think one is sometimes it's hard to, you know, um, gauge and judge in advance. What types of concerns could a transaction give rise to? So just being aware of, you know, here are the types of concerns that, you know, we need to be looking out for that the, that the agencies may have, that we would need to prepare to address as what that universe is. I think that in itself, there is a little bit of uncertainty about, as the scope of the agencies, antitrust reviews seems to be getting more expansive than it used to be in the past. Um, and based on, you know, recent comments received from the agencies, it is definitely getting even more so, so I think that's sort of one flavor of the challenge that I think merging parties face, um, in trying to, um, you know, plan for these transactions. I think a second is thinking about the different types of enforcers. I mean, uh, I think both Chris and, and up brought this up earlier, um, we are seeing some of this coming out of the FTC, but, you know, in many cases the states are leading the charge, particularly when it comes to these nontraditional theories or these newer theories. So we talked about, you know, labor markets in the context of Rhode Island. Um, but if you, uh, if you look at California, that's another example of a state that, um, you know, is leading the charge on, uh, say cross market effects, uh, with, you know, with, uh, the transaction between Cedar Sinai and Huntington hospital, which last year, uh, the FTC did not challenge that transaction, but the state of California required some conditions, uh, as a precursor for that transaction to close on the basis that, you know, that transaction will, uh, otherwise harm competition be based on cross market theory. So it's not just the FTC we need to be thinking about in the context of these non-traditional theories, but it's also the state forces. And finally, I think the challenge that, you know, we as practitioners face and translates a little bit to the merging parties as well in dealing with these theories is because these, some of these theories like cross market effects, for example, are more Mason, newer, it's harder to, you know, there are no readily available screens. So it's harder to come up with, you know, or to say concretely, you know, here's, uh, or to, uh, to come up with concrete measures that say, you know, here's the extent of concern. So certainly there are some work that we can do to say, you know, whether there may be a concern here or not, but because, uh, of, you know, the lack of, of precedent, lack, uh, frankly, even the lack of literature on some of these, the, the screens and the thresholds are a little fuzzier. So I think that those are some of the challenges that I see as a practitioner in dealing with these non-traditional thes.
Speaker 2:Yeah, it's a, it's a great point. Uh, Chris, uh, did you have any thoughts on, on the issues that Subaru raised, um, particularly coming from the perspective of, you know, somebody who's in house and, you know, how do you advise your client on, on how to handle these kinds of issues?
Speaker 4:That's a great question. And following up on super's comments, I think that parties that are planning their transactions need to anticipate that as the agencies are doing these more comprehensive reviews, thats described, um, sometimes it's called the holistic merger review taking into account the non-price concerns about a potential transaction. I think parties have to anticipate that that review is going to take the agency staff longer, a time to do, um, they don't have the tools that they have in the context of price effects. So they need to develop the tools they need to do. Um, I think a broader review of data and information. So it's gonna take staff longer. It also means it's going to be more intensive and burdensome on the parties who may be asked to produce a lot more data and information outside of what we have seen historically in a second, um, request context. So I I've heard that merging health systems have been asked questions in the, uh, second request process about things like their, uh, environmental practices or waste management management practices also relating to governance issues or, um, privacy data security issues. And, and of course the labor issues. So you start to see that it's a pretty broad array of, um, substantive issues that are being explored. And certainly it's going to take more time. And I think it's really hard to predict where a particular investigation's going to go. So that injects the whole process with a new layer of uncertainty. Um, it also raises some tough questions that I think Lona fo, who is another economist and a member of the antitrust practice group. She did a great job of addressing in her presentation as to how do you balance these competing interests. You could have a transaction that has some really positive benefits from a environmental waste management perspective, but maybe it's got some more challenging issues around data and privacy security. So which issue trumps. Um, so it's, it's really a whole new world of inquiry. Um, I think particularly at the FTC, um, and I don't know exactly what guidance Pete to give, uh, the parties doing the transaction planning other than to have some really good conversations with your outside council, um, and maintain as, uh, open a line of communications you possibly can have on any potential sort of skeletons in the closet, or winkling weak links in either of the merging parties performance on, on ESG type issues.
Speaker 2:Yeah, I think I, that's a great point. I think one of the real challenges for merging parties is this sort of uncertainty around what are the agencies really gonna focus on? Sue, who mentioned screening, you know, measures. And traditionally one might look at the shares and try to estimate, uh, HHI, which for practitioners out there who aren't antitrust folks, it's really just a measure of market concentration. And those would give you a sense at least of whether or not the agencies might want to take a close look at the deal. Um, those would still potentially, uh, help you determine if the agencies would be interested, but they're not exclusive necessarily. Um, and you know, one other area that I think is quite interesting and, and I think traditionally has fallen into the realm of states more than the FTC is how transactions will impact underserved communities. Um, and oftentimes this is part of what transacting parties think about is, you know, charity care or the ability to bring higher quality care to rural hospitals, you know, that that are being acquired by a larger system. Um, but Chris, to your point, how do you balance that? What is the, you know, how much weight do you give something like that versus, uh, you know, potential labor market concern versus, you know, a loss of negotiating leverage versus a vertical, uh, issue. It's, it's really, uh, it, it does create sort of a, a broth of issues that you have to contend with. And I think, um, you know, what, what I've been trying to advise my clients is is that you really do have to think about each of these issues independently and an combination with each other, when you're thinking about how you're going to present your deal to the FTC or the state ag, you know, this case may be so, you know, it's better to be prepared, uh, in advance, but that doesn't mean every issue that you think about is gonna be the one they focus on, um, which I think segues into, uh, you know, something that's come up very recently in the last few days, which are two new merger challenges by the FTC one in Utah, and one in, in New Jersey and contrary, I think perhaps to many folks expectations, we didn't include any of these non-traditional theories of harm. Um, so what are we to make of that? Is this all much to do about nothing?
Speaker 3:Yeah. I mean, those, it's an interesting question, Pete. I think certainly the FTC has, you know, in these two new complaints, um, two new challenges that they've brought again, just going by the complaints, which are, which are public. Um, they seem to have stuck to their, you know, their traditional playbook or bringing challenges in these hospital transactions, focusing on, um, you know, the closeness of competition between the parties, the market concentration, uh, measures the, the loss, the increase in negotiating leverage against commercial insurers, um, and not really, you know, trade into these other non-traditional theories. I think part of it may just have to do with, um, you know, going back to the discussion in, in, uh, care new England in Rhode Island, where there was a split between the commissioners as to whether or not it made sense for them, whether or not they ought to be bringing a, an allegation based on a labor market theory, farm, or not in conjunction with, you know, what they were alleging on the acute care side. Uh, I think, um, I don't know the specifics of, you know, what may have gone on behind the scenes, but one consideration on the FPC brings these cases is, um, to the extent, you know, if you are adding on multiple markets, it requires, um, you know, a demonstration of, of harm in each of these multiple markets. And for you to think about a mechanism in each of these multiple markets, um, they may have, have chosen to, you know, focus their complaints, their allegations on the theories of harm, um, which they felt were the strongest as well as you know, which were adequate to clear the bar. So maybe that was some sort of consideration like that, which went on behind the scenes. Um, unless of course, it's also possible that these transactions did not raise any concerns along those lines. Um, as outsiders, as an outsider myself, um, it's not quite clear to me, uh, as to what was the, um, the calculus behind that, but it was interesting to see that the complaint itself, you know, hu to their, their traditional, the FTCs traditional playbook of, of, uh, you know, hospital monitor challenges.
Speaker 4:I, I agree. I think the supers points are excellent and gonna be some time before we know whether this was more a question of litigation strategy and, and resource allocation, um, or simply that other issues weren't raised by these transactions. I think one of the challenges that FTC must be sensitive to is just a lack of case law precedent on some of these issues. Um, and, and that raises some bigger issues on the one hand, obviously the FTC wants to be out there winning cases and, and blocking deals that they feel to be anti-competitive and using their strongest strategy to do so as efficiently as possible. On the other hand, it does raise a question of, uh, what's the lasting impact of all the work that's gone into developing the holistic merger review, and if you're not litigating, um, it becomes very academic. Um, and, and that just raises some really interesting questions that I think we're gonna have to keep watching and observing to see where the agency comes out.
Speaker 2:Yeah, no, that's a great point. And it does, it does raise the question of, you know, if the FTC ultimately is not going to bring cases on these theories, you know, is it a tax on mergers that, um, you know, it's just a cost that these parties are gonna have to bear and it's ultimately not gonna go anywhere. Um, I, I think it's premature to really draw any conclusions for sure. But, um, yeah, it's an area to watch. Uh, and, and, um, I, I don't think it's the last we've heard across market effects or, or labor markets, uh, um, to be sure. So, um, to just to shift gears a little bit further, you know, one of the other panels that would, one of the, you know, great panels was, uh, focused on changes to the FTC review process on deals. And, um, you know, that panel was practical considerations in a new antitrust world world, which I highly recommend if, if you can, um, go listen to the, the recording or, uh, just check out the slides on online. Um, it, it covered a range of changes to the FTC review process, um, and the implications of those, uh, I am gonna direct this first to Chris, uh, you know, as an in-house lawyer, thinking about how do you advise your, your internal client, what developments do you really need to make sure they're aware of on a sort of logistical practical side, um, before they get into a deal, uh, that might be reviewed by the FTC.
Speaker 4:Thanks. Great question for me. A lot of times, I think it really boils down to, um, how are you planning your transaction? What's the timing and how do you make sure that you are as prepared as possible to meet whatever timing you you're hoping to meet. Um, and that ties, of course, to some of the merger review process change that you're, you're talking about because some of those merger review process changes, inject some more uncertainty into the process. Um, I think all of them generally impose more burdens on the merging parties, and it's important to understand what they are so that you can prepare for them and arrange your timing around it. Um, some of the, um, substantive issues that we discussed around holistic merger review are obviously gonna have some, some timing implications. We touched on that, but the actual merger review process is also changing under chairman Khan's, um, jurisdiction. Um, one of the most important changes is that the FTC is now putting the burden on the parties to come forward with more information about their operations and, um, their structures before the FTC staff will negotiate the second request. Um, so that just means that, um, the process is going to be more intense at the beginning and potentially a little bit slower than it had been historically. And I, I think the FTC has recognized that that may be an impact relatedly, the parties, um, have some additional other burdens like submitting complete privilege logs, where historically parties were permitted to submit more partial logs, um, because some of these activities are sewing down the merger review process. The, the FTC has adopted a practice of issuing these close at your own risk letters, um, where they, the agency may not have time to review a particular transaction or complete the merger review, um, prior to the expiration of the HSR, uh, waiting periods. And in those cases, parties are getting letters that basically put them on notice that the FTC may come back and either resume or, um, pursue a whole new review, a little bit different than the statutory purpose behind the HSR merger laws. Um, and then finally, I'll mention that the FTC has resumed an older practice of issuing, um, prior approvals or prob including prior approval requirements in their consent agreements. And this means that the parties may be agreeing that they're going to go provide prior notice and get FTC clearance before closing future deals. And often this, um, picks up non HSR reportable transactions and gives the FTC some additional latitude that they don't have under the, um, statutory HSR provisions. Um, so all of these inject additional of uncertainty they're designed to give the FTC the ability to perform what they've called more comprehensive reviews. Um, and so I, I think the implications of those are kind of clear.
Speaker 2:Yeah, it's a, it's a real challenge, I think, for merging parties to plan for some of these issues, uh, that, that you mentioned, Chris, uh, you know, I think the prior approval one is really tricky. Um, and, and, you know, I'll note that this is, as you mentioned, not in not a brand new policy, but it has been dormant if you will, for a very long time. And it essentially, you know, if you are emerging party, the FTC, um, may require you to agree to prior approval for future deals as part of a consent decree to get your current deal done. Uh, and these can run 10 years and may mean you have to notify the FTC of every acquisition you make, uh, and that would be outside potentially outside of the HSR process. Um, so it it's a real tax on future deals, too, that if you are thinking about, you know, a roll up, for example, you know, if you're a major system and, and you're planning a series of transactions, this is something to keep in mind that D FTC may insist on this, uh, as a way to corral, uh, or limit, uh, mergers in the future. Um, and, you know, I think thus far, uh, at last count, this might not be a hundred percent accurate, but I think there have been about seven or so private prior approval requirements in this, in this latest round. But one of the really interesting ones is Hackensack, uh, Englewood, which the parties abandoned the deal after the third circuit affirmed the preliminary injunction blocking the transaction. Uh, but the administrative trial, uh, within the FTC is still ongoing. Um, the trial itself hasn't started, but the procedures are still there. Uh, and I don't have any direct insight into this, but there is speculation, uh, that perhaps the FTC is thinking about a prior approval requirement there. So even after litigating and losing and abandoning your deal, um, you may not be out of the woods. I don't Sue, if you had anything to add on this topic, I it's, uh, it's a whole range of issues that that could affect merger analysis.
Speaker 3:Yeah, no, I, I entirely agree with what you and, and Chris said, Pete, and you guys raised some excellent points. I think from our perspective as economists, you know, working with merging parties. I mean, it's, it's, it's clear, it's, I guess, getting clearer and clear that, you know, the earlier that you are able to get your arms around, here's what the information or here's the information that you will need in order to at least try and engage the extent of concerns along the, all of these issues, you know, given the expanded scope of the, of these antitrust reviews, these merger investigations, the sooner we are able to get our arms around, you know, can we at least rule out these concerns or can we, um, you know, arrive at a think about, you know, shortcuts or a quick way for us to, you know, limit any potential areas of inquiry that the agencies may have, especially in these sort of non-traditional areas. I think that has become more and more, I think, an important topic of discussion and area for us to focus on when we work with, uh, um, with merging parties in the earlier stages of the investigation, because you certainly don't want to be in a situation where some of these come up when you are, you know, in the first 30 days or 60 days of your investigation. And then by then, it's too late for you to do any substantive, you know, affirmative work or advocacy work that will help address any concerns in which case, you know, it'll then automatically, or it'll likely go into prolong, you know, second request investigation type phase. So the earlier we are able to invest, you know, resources, time, data into that, to try and rule out some of these at least think through some of these issues. Um, I think, uh, the more, uh, effective it can be all that said, I think that is still, like, you both were saying this layer of uncertainty, which does make it harder to prepare. Um, but you know, um, I think the sooner we, or the earlier in the process we get to preparing, I think just
Speaker 2:In other words, call SU early and often, I think the awesome<laugh> I think there's the advice. Um, so, uh, last but not least, um, uh, one other topic, uh, we were hoping to cover today is the new wave of antitrust legislation and, and how to think about that. Um, this is a moving target to say the least, um, and you we've heard about. Um, and, and we heard about this during the conference, uh, in Nashville, there's a push in Congress and in various states, uh, to enact new antitrust laws. And a lot of what's been covered in the media is really focused on tech, but, um, a lot of these bills have real implications for transactions across industries and including healthcare. Um, and just to flag one, there's a bill sponsored by Senator Kochar, uh, it's, it appears to have some momentum perhaps more than others, although that's always, you know, a little bit of tey reading, um, it's called the competition and, and antitrust law enforcement reform act, um, which is a tongue twister, but, um, it would amend the Clayton act, the Sherman act and the FTC acts, um, among other things, it would make it easier to block mergers, um, and prohibit, uh, seemingly commonplace conduct, like refusal to deal tying, bundling, um, and exclusive dealing, uh, particularly with, you know, involving firms that have higher than 50% share. Um, I, you know, the, the, the concern, I think, uh, with a bill like this is that it could introduce quite a bit of uncertainty, um, in antitrust analysis, because with new and untested standards or revised standard, um, it will take time for courts to interpret them. And in the meantime, if your deal is pending, um, it may be harder to assess the risk of, of a challenge or ultimately whether your deal would be blocked. So, um, you know, that uncertainty in and of itself can, can act as a tax on, on transactions, um, you know, potentially with sellers demanding higher prices or other protections. Um, and, uh, it, it does lower potentially if it, if it ultimately passes, you know, the threshold that, that private plaintiffs or the government would need to meet. So, um, it, you know, it's, it's just one example, I think of where, uh, Congress and, um, and the administration, the Biden administration are, are going, um, and, you know, it remains to be seen whether the, these bills will be passed, but if they are, uh, it could be a brave new world. And I think Chris, you had some thoughts on the state law side, but I, you know, I welcome any reactions on the, on the federal side too.
Speaker 4:Yeah. Let me just react very quickly because I think you raised a really important policy issue, which is, um, uncertainty, I think can impose a form of over enforcement. Um, and one thing that's really important to recall, I think from a substantive economic and antitrust perspective, um, over enforcement is just as bad for consumers as under enforcement and potentially birth because they can show innovation. Um, so I just wanted to flag that, um, much of what we're talking about has much broader policy implications. Um, some of which is being discussed at both the federal and the state level, and here in New York, we had, um, a proposed bill, the 21st century act, which passed our Senate, but not our assembly. Um, and of course we just, um, went into summer recess, um, without it passing fully, but we expect that we'll be looking at this proposed legislation again, come the fall. One of the really notable, um, elements of the proposed legislation is a new statutory prohibition on ause of dominance, which under this legislation could be demonstrated by the simple fact of using a non-compete provision or an exclusive provision. Um, so the use of restrictive covenants becomes an element that defines abuse of dominance and the statute specifies that parties that are using these restrictive covenants should not have the opportunity to offer efficiency or other justifications. So we would be in a world where the use of restrictive coverance would be per se, illegal a criminal state violation. And that's really, um, not any, uh, approach that we've seen in any other state or at the federal level, I think anywhere outside of the EU, perhaps. And I have heard that a number of other states are considering similar provisions, but they're waiting to see what happens in New York. So I think we do need to keep our eye on what's happening across the states. And in addition to some of the new substantive provisions, um, everywhere west coast to east coast, we're starting to see new pre-merger notification requirements. New York's 21st century act would have a pre-merger notification obligation for transactions at the 10 million threshold. So I'll let that just sit out there and percolate for a million for a minute,$10 million threshold. That's a lot of merger review for our state AGS. And, and one of the issues that that raises by the way is we're starting to see different pre-merger notification obligations, um, Connecticut, Rhode Island, state of Washington, Oregon, Nevada, all have their own unique pre-merger notifications. And that's going to become a little bit of a beast to manage for outside council and for merging parties. So, one thing that I'm hoping is that maybe the state AGS through the national association of attorney generals will start to think about maybe a unified approach.
Speaker 2:Yeah, those are all really important points to, to raise in that 10 million threshold is I, you know, having talked to a few clients about that, that, that raised a, raised a few eyebrows, I, I will say, um, we'll see where it goes. Uh, Sue Subu any thoughts on the, the new legislation?
Speaker 3:Um, no, nothing beyond, I think Chris's new excellent points. It does seem striking to me some of the thresholds that are being discussed, um, just the cost of enforcement itself, you know, uh, both in terms of the actual, uh, you know, investigations themselves. But also I think like Chris pointed out as economists, we worry about, you know, innovation impact and how that's gonna be impacted by levels of over enforcement. I think that's a real concern and that's a cost to enforcement that really needs to be, you know, taken into account by policy makers. So, and I hope it's
Speaker 2:Okay. Well, I think we'll leave it at that. Uh, we are out of time. Um, I really wanna thank Chris and suebu, this was excellent. Um, and, and I really appreciate the thoughtful discussion. Thanks everybody.
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