The Federal Trade Commission has gone after yet another consummated deal, filing suit to break up Laboratory Corp. of America's $57.5 million acquisition in June of rival clinical laboratory testing company Westcliff Medical Laboratories Inc.
In an administrative complaint filed yesterday, the FTC alleged that the merger violates antitrust laws and would lead to higher prices and lower quality in the Southern California market for the sale of clinical laboratory testing services to physician groups.
This is the 10th consummated deal challenged by the FTC since the start of FY 2009, compared to an average of one deal a year for the prior five years.
The commissioners voted 4 to 1 to bring the complaint, with Republican Commissioner Thomas Rosch dissenting.
“Although I think that there is reason to believe that this transaction will have anticompetitive effects, I cannot support a complaint that alleges an erroneous definition of the relevant product market,” he wrote.
Rosch faulted agency staff for defining the market at issue as the “sale of clinical laboratory testing services under capitated contracts to physician groups” alone. He argued the market should also include “clinical laboratory services provided under fee-for-service contracts to those same physician groups.”
“I cannot and will not allow the staff to dictate, in this or any other case, determinations that the Commission should make,” Rosch wrote.
The majority issued a statement as well, noting that “While Commissioner Rosch has issued a dissenting statement, we should not lose sight of the critical fact with which we all agree: this merger merits further scrutiny….Disagreement over precisely how to apply market definition analysis in this case should not obscure agreement over the bottom-line assessment that there is reason to believe LabCorp’s acquisition of Westcliff is likely to substantially lessen competition and harm consumers.”