On June 25, 2012, the U.S. Supreme Court granted the Federal Trade Commission’s request for certiorari review in FTC v. Phoebe Putney Health System, Inc., a hospital merger case on appeal from the U.S. Eleventh Circuit Court of Appeals and the U.S. District Court for the Middle District of Georgia.

At issue in the case is the FTC’s challenge to a hospital merger that would give the acquiring health system 100% market share in its county and more than 90% market share of the multi-county region in rural southern Georgia.  Applying the state action doctrine, both the trial court and the Eleventh Circuit held that the merger of two private hospitals, Phoebe Putney Memorial Hospital and Palmyra Park Hospital, was immune from antitrust laws even though all parties agreed that the merger created a monopoly.  State action immunity applies when a policy that displaces competition is “clearly articulated” and “actively supervised” by the state.  The doctrine can extend to private actors when they act pursuant to a clearly articulated state policy to displace competition, and they are actively supervised by the state.  Clear articulation is found when a restraint of trade is a “foreseeable” consequence of the action taken by the state.