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Global rules on foreign direct investment (FDI)
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
United States | Publication | novembre 2023
In separate speeches on October 26, 2023, top officials from both the US Department of Justice (DOJ) Antitrust Division and Federal Trade Commission (FTC) confirmed that federal antitrust enforcers have trained their focus on the healthcare sector.
Deputy Assistant Attorney General Andrew Forman told the audience that DOJ's enforcers "eat their cereal in the morning thinking about [healthcare competition] and go to sleep thinking about it too." He identified three areas in which DOJ is concentrating its investigative resources in the healthcare industry.
1. Non-merger conduct. DOJ is deploying more of its resources to investigating conduct unrelated to mergers and acquisitions. While Forman didn't identify any specific industry conduct in his remarks, an abiding theme of enforcement in the Biden Administration has been its priority on the investigation of potential monopolization offenses, which involve the misuse of market power through practices intended to exclude competitors from markets, such as by denying or limiting access to essential inputs, including in local or regional markets.
2. Healthcare transactions and consolidation. Forman's remarks repeated the Biden Administration's tough stance on consolidation in the sector. Consistent with DOJ's and FTC's recently and significantly revised draft Merger Guidelines, Forman stressed that "[i]n health care, the web of relationships and money flows are complex, and the analysis often does not fit neatly into historical boxes like horizontal [which involve direct competitors] or vertical [which involve companies at different levels of the supply chain]." DOJ will apply a high standard to proposed remedies to address agency concerns, and it may prefer to block outright rather than try to fix transactions that it deems inherently problematic.
Forman singled out four areas of DOJ concern for the healthcare sector:
3. Labor-related competition issues. Finally, Forman stressed that DOJ would remain vigilant around competition concerns that impact workers. This includes prosecutions of no-poach and wage-fixing cases and a growing push toward eliminating non-competes. The agency also has expanded its consideration of labor issues with its new draft Merger Guidelines, which make clear that the FTC and DOJ will now look at transactions for their impacts on labor.
FTC Commissioner Alvaro Bedoya, speaking in a separate session, confirmed that the FTC shares many of the DOJ's priorities.
He expressed concern about vertically integrated entities steering prescriptions to their own pharmacies, a practice that the FTC is currently investigating. The use of rebates in the prescription drug industry—a practice that Bedoya described as "aggressive" —also remains top of mind for the FTC. Bedoya made clear his view that such allegations fall within the "breadth of authority" granted by Section 5 of the FTC Act.
Like Forman, Bedoya said that the FTC would view with greater skepticism the claimed procompetitive benefits of vertical acquisitions (such as in recent complaints challenging deals involving defense and medical testing). He heralded the new draft Merger Guidelines, noting that protecting labor competition is at the heart of the agencies' new merger review process.
Finally, Bedoya mentioned that the FTC is looking closely at the pharmaceutical supply chain, as well as biologics and biosimilars, which the FTC and FDA have committed to work on together.
Last week's remarks stand as the most recent reminder that US antitrust enforcers—who are working with other federal agencies as well as state partners—have prioritized their scrutiny of the healthcare sector to address both merger and conduct-related competition concerns. The speeches also open a window onto the full breadth of agency concerns with competition in the healthcare sector.
Norton Rose Fulbright's antitrust team regularly advises clients on all aspects of competition in the healthcare industry, including updating and strengthening antitrust compliance, counseling on antitrust policies and representing healthcare clients in antitrust enforcement actions and litigation.
Special thanks to Law Clerk Will Conway (Washington, DC) for his assistance in the preparation of this content.
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