[Federal Register Volume 59, Number 43 (Friday, March 4, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: X94-10304]


[[Page Unknown]]

[Federal Register: March 4, 1994]


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FEDERAL TRADE COMMISSION
[File No. 941 0005]

 

Columbia Healthcare Corporation, et al.; Proposed Consent 
Agreement with Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: In settlement of alleged violations of federal law prohibiting 
unfair acts and practices and unfair methods of competition, this 
consent agreement, accepted subject to final Commission approval, would 
require, among other things, the respondents to divest the HCA Aiken 
Regional Medical Center, in South Carolina, to Commission-approved 
acquirers and to complete the divestiture within twelve months, or else 
consent to the appointment of a trustee to consummate the divestiture. 
In addition, the order would prohibit the respondents from acquiring or 
transferring, without prior Commission approval, any acute care 
hospital in the Augusta-Aiken area.

DATES: Comments must be received on or before May 3, 1994.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:
Oscar Voss, FTC/S-3115, Washington, DC 20580. (202) 326-2750.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of 
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby 
given that the following consent agreement containing a consent order 
to cease and desist, having been filed with and accepted, subject to 
final approval, by the Commission, has been placed on the public record 
for a period of sixty (60) days. Public comment is invited. Such 
comments or views will be considered by the Commission and will be 
available for inspection and copying at its principal office in 
accordance with Section 4.9(b)(6)(ii) of the Commission's Rules of 
Practice (16 CFR 4.9(b)(6)(ii)).

Agreement Containing Consent Order

    In the Matter of: Columbia Healthcare Corporation, a 
corporation, and HCA-Hospital Corporation of America, a corporation.

    The Federal Trade Commission (``Commission''), having initiated an 
investigation into the proposed acquisition of HCA-Hospital Corporation 
of America (``HCA'') by Columbia Healthcare Corporation (``Columbia''), 
and it now appearing that Columbia and HCA, hereinafter sometimes 
referred to as proposed respondents, are willing to enter into an 
agreement containing an order to divest certain assets and to cease and 
desist from certain acts;
    It is hereby agreed by and between Columbia and HCA, by their duly 
authorized officers and attorneys, and counsel for the Federal Trade 
Commission that:
    1. Proposed respondent Columbia Healthcare Corporation is a 
corporation organized, existing and doing business under and by virtue 
of the laws of the State of Delaware, with its principal place of 
business at 201 West Main Street, Louisville, Kentucky 40202.
    2. Proposed respondent HCA-Hospital Corporation of America is a 
corporation organized, existing and doing business under and by virtue 
of the laws of the State of Delaware, with its principal place of 
business at One Park Plaza, Nashville, Tennessee 37203.
    3. Proposed respondents admit all the jurisdictional facts set 
forth in the draft of complaint here attached.
    4. Proposed respondents waive:

    (a) Any further procedural steps;
    (b) The requirement that the Commission's decision contain a 
statement of findings of fact and conclusions of law;
    (c) All rights to seek judicial review or otherwise to challenge 
or contest the validity of the order entered pursuant to this 
agreement; and
    (d) Any claim under the Equal Access to Justice Act.

    5. This agreement shall not become part of the public record of the 
proceeding unless and until it is accepted by the Commission. If this 
agreement is accepted by the Commission it, together with the draft of 
complaint contemplated thereby, will be placed on the public record for 
a period of sixty (60) days and information in respect thereto publicly 
released. The Commission thereafter may either withdraw its acceptance 
of this agreement and so notify the proposed respondents, in which 
event it will take such action as it may consider appropriate, or issue 
and serve its complaint (in such form as the circumstances may require) 
and decision, in disposition of the proceeding.
    6. This agreement is for settlement purposes only and does not 
constitute an admission by proposed respondents that the law has been 
violated as alleged in the draft of complaint here attached, or that 
the facts as alleged in the draft complaint, other than jurisdictional 
facts, are true.
    7. This agreement contemplates that, if it is accepted by the 
Commission, and if such acceptance is not subsequently withdrawn by the 
Commission pursuant to the provisions of Sec. 2.34 of the Commission's 
Rules, the Commission may, without further notice to proposed 
respondents, (1) issue its complaint corresponding in form and 
substance with the draft of complaint here attached and its decision 
containing the following order to divest and to cease and desist in 
disposition of the proceeding and (2) make information public in 
respect thereto. When so entered, the order to divest and to cease and 
desist shall have the same force and effect and may be altered, 
modified or set aside in the same manner and within the same time 
provided by statute for other orders. The order shall become final upon 
service. Delivery by the U.S. Postal Service of the complaint and 
decision containing the agreed-to order to proposed respondents' 
addresses as stated in this agreement shall constitute service. 
Proposed respondents waive any right they may have to any other manner 
of service. The complaint may be used in construing the terms of the 
order, and no agreement, understanding, representation or 
interpretation not contained in the order or this agreement may be used 
to vary or contradict the terms of the order.
    8. Proposed respondents have read the proposed complaint and order 
contemplated hereby. They understand that once the order has been 
issued, they may be required to file one or more compliance reports 
showing that they have fully complied with the order. Proposed 
respondents further understand that they may be liable for civil 
penalties in the amount provided by law for each violation of the order 
after it becomes final.

Order

I

    It is ordered that, as used in this Order, the following 
definitions shall apply:
    A. ``Columbia'' means Columbia Healthcare Corporation, a 
corporation organized, existing and doing business under and by virtue 
of the laws of Delaware, with its principal place of business at 201 
West Main Street, Louisville, Kentucky 40202, as well as its directors, 
officers, employees, agents, representatives, parents, divisions 
subsidiaries, affiliates, and their respective successors and assigns, 
and the directors, officers, employees, agents, or representatives of 
Columbia's divisions, subsidiaries, affiliates, and their respective 
successors and assigns.
    B. ``HCA'' means HCA-Hospital Corporation of America, a corporation 
organized, existing and doing business under and by virtue of the laws 
of Delaware, with its principal place of business at One Park Plaza, 
Nashville, Tennessee 37203, as well as its directors, officers, 
employees, agents, representatives, parents, divisions, subsidiaries, 
affiliates, and their respective successors and assigns, and the 
directors, officers, employees, agents, or representatives of HCA's 
divisions, subsidiaries, affiliates, and their respective successors 
and assigns.
    C. ``Respondents'' means Columbia and HCA, collectively and 
individually.
    D. ``Acute care hospital'' means a health facility, other than a 
federally owned facility, having a duly organized governing body with 
overall administrative and professional responsibility, and an 
organized medical staff, that provides 24-hour inpatient care, as well 
as outpatient services, and having as a primary function the provision 
of inpatient services for medical diagnosis, treatment, and care of 
physically injured or sick persons with short-term or episodic health 
problems or infirmities.
    E. To ``acquire an acute care hospital'' means to directly or 
indirectly acquire the whole or any part of the assets of an acute care 
hospital; to acquire the whole or any part of the stock or share 
capital of, the right to designate directly or indirectly directors or 
trustees of, or any equity or other interest in, any person which 
operates an acute care hospital; or to enter into any other arrangement 
to obtain direct or indirect ownership, management or control of an 
acute care hospital or any part thereof, including but not limited to a 
lease of or management contract for an acute care hospital.
    F. To ``operate an acute care hospital'' means to own, lease, 
manage, or otherwise control or direct the operations of an acute care 
hospital, directly or indirectly.
    G. ``Affiliate'' means any entity whose management and policies are 
controlled in any way, directly or indirectly, by the person with which 
it is affiliated.
    H. ``Person'' means any natural person, partnership, corporation, 
company, association, trust, joint venture or other business or legal 
entity, including any governmental agency.
    I. ``Augusta-Aiken'' means the three-county area consisting of the 
counties of Richmond and Columbia in Georgia and Aiken County in South 
Carolina.
    J. ``HCA Aiken Regional Medical Center'' means the general acute 
care hospital currently owned and operated by HCA at 202 University 
Parkway, Aiken, South Carolina 29801, all of its title, properties, 
stock, rights, privileges, and other assets and interests, and all 
other related HCA assets and interests in Augusta-Aiken, of whatever 
nature, tangible and intangible, including without limitation all 
medical office buildings, other buildings, machinery, equipment, and 
other property of whatever description, except for accounts receivable 
and cash.
    K. ``Commission'' means the Federal Trade Commission.

II

    It is further ordered that: A. Within twelve (12) months after the 
date this Order becomes final, respondents shall divest, absolutely and 
in good faith, HCA Aiken Regional Medical Center. HCA Aiken Regional 
Medical Center shall be divested only to an acquirer or acquirers that 
receive the prior approval of the Commission, and only in a manner that 
receives the prior approval of the Commission. A condition of approval 
by the Commission of the divestiture shall be a written agreement by 
the party or parties acquiring HCA Aiken Regional Medical Center that 
it will not sell for a period of ten (10) years from the date of the 
divestiture, directly or indirectly, through subsidiaries, partnerships 
or otherwise, without the prior approval of the Commission, HCA Aiken 
Regional Medical Center to any other person who operates, or will 
operate immediately following such sale, any other acute care hospital 
in Augusta-Aiken. The purpose of the divestiture required by this Order 
is to ensure the continuation of HCA Aiken Regional Medical Center as 
an ongoing, viable acute care hospital and to remedy the lessening of 
competition alleged in the Commission's compliant.
    B. Respondents shall comply with all terms of the Agreement to Hold 
Separate, attached hereto and made a part hereof as Appendix I. Said 
Agreement shall continue in effect until such time as respondents have 
divested HCA Aiken Regional Medical Center or until such other time 
provided in the Agreement to Hold Separate.
    C. Pending divestiture, respondents shall take such action as is 
necessary to maintain the viability and marketability of HCA Aiken 
Regional Medical Center and shall not cause or permit the destruction, 
removal or impairment of any assets or businesses of HCA Aiken Regional 
Medical Center, except in the ordinary course of business and except 
for ordinary wear and tear.

III

    It is further ordered that: A. If respondents have not divested, 
absolutely and in good faith and with the prior approval of the 
Commission, HCA Aiken Regional Medical Center as required by Paragraph 
II of this Order within twelve (12) months after the date this Order 
becomes final, the Commission may appoint a trustee and respondents 
shall consent to the appointment of a trustee by the Commission to 
effect the divestiture required by Paragraph II of this Order. In the 
event the Commission or the Attorney General brings an action pursuant 
to Section 5(l) of the Federal Trade Commission Act, 15 U.S.C. 45 (l) 
or any other statute enforced by the Commission, respondents shall 
similarly consent to the appointment of a trustee in such action. 
Neither the appointment of a trustee nor a decision not to appoint a 
trustee under this Paragraph shall preclude the Commission or the 
Attorney General from seeking a civil penalties or any other relief 
available to it, including a court-appointed trustee, pursuant to 
section 5(l) of the Federal Trade Commission Act, or any other statute 
enforced by the Commission, for any failure by the respondents to 
comply with this Order.
    B. If a trustee is appointed by the Commission or a court pursuant 
to Paragraph III.A. of this Order, respondents shall consent to the 
following terms and conditions regarding the trustee's powers, 
authorities, duties and responsibilities:

    1. The Commission shall select the trustee, subject to the 
consent of respondents, which consent shall not be unreasonably 
withheld. The trustee shall be a person with experience and 
expertise in acquisitions and divestitures of acute care hospitals. 
If respondents have not opposed, in writing, the selection of any 
trustee within ten (10) days after notice by the staff of the 
Commission to respondents of the identity of any proposed trustee, 
respondents shall be deemed to have consented to the selection of 
the proposed trustee.
    2. The trustee shall have the exclusive power and authority, 
subject to the prior approval of the Commission, to divest HCA Aiken 
Regional Medical Center.
    3. The trustee shall have eighteen (18) months from the date of 
approval of the trust agreement described in Paragraph III.B.8 of 
this Order to accomplish the divestiture, which shall be subject to 
the prior approval of the Commission. If, however, at the end of the 
eighteen-month period the trustee has submitted a plan of 
divestiture or believes that divestiture can be accomplished within 
a reasonable time, the divestiture period may be extended by the 
Commission, or by the Court for a court-appointed trustee; provided, 
however, that the divestiture period may only be extended two (2) 
times.
    4. The trustee shall have full and complete access to the 
personnel, books, records and facilities relating to HCA Aiken 
Regional Medical Center, or any other relevant information, as the 
trustee may reasonably request. Respondents shall develop such 
financial or other information as such trustee may reasonably 
request and shall cooperate with any reasonable request of the 
trustee. Respondents shall take no action to interfere with or 
impede the trustee's accomplishment of the divestiture. Any delays 
in divestiture caused by respondents shall extend the time for the 
divestiture under this Paragraph III in an amount equal to the 
delay, as determined by the Commission or the Court for a court-
appointed trustee.
    5. Subject to respondents' absolute and unconditional obligation 
to divest at no minimum price and the purpose of the divestiture as 
stated in Paragraph II of this Order, the trustee shall use his or 
her best efforts to negotiate the most favorable price and terms 
available with each acquiring entity for the divestiture of HCA 
Aiken Regional Medical Center. The divestiture shall be made in the 
manner set out in Paragraph II of this Order; provided, however, 
that if the trustee receives bona fide offers from more than one 
acquiring entity, and if the Commission determines to approve more 
than one such acquiring entity, the trustee shall divest to the 
acquiring entity or entities selected by respondents from among 
those approved by the Commission.
    6. The trustee shall serve, without bond or other security, at 
the cost and expense of respondents, on such reasonable and 
customary terms and conditions as the Commission or a Court may set. 
The trustee shall have authority to employ, at the cost and expense 
of respondents, such consultants, accountants, attorneys, investment 
bankers, business brokers, appraisers, or other representatives and 
assistants as are reasonably necessary to carry out the trustee's 
duties and responsibilities. The trustee shall account for all 
monies derived from the sale and all expenses incurred. After 
approval by the Commission and, in the case of a court-appointed 
trustee, by the Court, of the account of the trustee, including fees 
for his or her services, all remaining monies shall be paid at the 
direction of respondents and the trustee's power shall be 
terminated. The trustee's compensation shall be based at least in 
significant part on a commission arrangement contingent on 
divestiture through the trustee.
    7. Respondents shall indemnify the trustee and hold the trustee 
harmless against any losses, claims, damages, or liabilities arising 
in any manner out of, or in connection with, the trustee's duties 
under this Order.
    8. Within thirty (30) days after appointment of the trustee, and 
subject to the prior approval of the Commission and, in the case of 
a court-appointed trustee, of the Court, respondents shall execute a 
trust agreement that transfers to the trustee all rights and powers 
necessary to permit the trustee to effect the divestiture required 
by this Order.
    9. If the trustee ceases to act or fails to act diligently, a 
substitute trustee shall be appointed in the same manner as provided 
in Paragraph III.A. of this Order.
    10. The Commission or, in the case of a court-appointed trustee, 
the Court may on its own initiative or at the request of the trustee 
issue such additional orders or directions as may be necessary or 
appropriate to accomplish the divestiture required by this Order.
    11. The trustee shall have no obligation or authority to operate 
or maintain HCA Aiken Regional Medical Center.
    12. The trustee shall report in writing to respondents and to 
the Commission every sixty (60) days concerning the trustee's 
efforts to accomplish the divestiture.

IV

    It is further ordered that, for a period of ten (10) years from the 
date this Order becomes final, no respondent shall, without the prior 
approval of the Commission, directly or indirectly, through 
subsidiaries, partnerships, or otherwise:


    A. Acquire any acute care hospital in Augusta-Aiken; or
    B. Permit any acute care hospital it operates in Augusta-Aiken 
to be acquired by any person that operates, or will operate 
immediately following such acquisition, any other acute care 
hospital in Augusta-Aiken.


    Provided, however, that no acquisition shall be subject to this 
Paragraph IV of this Order if the fair market value of (or, in case of 
a purchase acquisition, the consideration to be paid for) the acute 
care hospital or part thereof to be acquired does not exceed one 
million dollars ($1,000,000).

V

    It is further ordered that, for a period of ten (10) years from the 
date this Order becomes final, respondents shall not permit all or any 
substantial part of any acute care hospital they operate in Augusta-
Aiken to be acquired by any other person (except pursuant to the 
divestiture required by Paragraph II of this Order) unless the 
acquiring person files with the Commission, prior to the closing of 
such acquisition, a written agreement to be bound by the provisions of 
this Order, which agreement respondents shall require as a condition 
precedent to the acquisition.

VI

    It is further ordered that, for the purposes of determining or 
securing compliance with this Order, and subject to any legally 
recognized privilege, upon written request and on reasonable notice to 
respondents made at their principal offices, respondents shall permit 
any duly authorized representatives of the Commission:


    A. Access, during office hours and in the presence of counsel, 
to inspect and copy all books, ledgers, accounts, correspondence, 
memoranda and all other records and documents in respondents' 
possession or control relating to any matter contained in this 
Order; and
    B. Upon five days' notice to respondents and without restraint 
or interference from respondents, to interview their officers or 
employees, who may have counsel present, regarding such matters.

VII

    It is further ordered that: A. Within sixty (60 days after the date 
this Order becomes final and every sixty (60) days thereafter until 
respondents have fully satisfied the divestiture obligations of this 
Order, respondents shall submit to the Commission a verified written 
report setting forth in detail the manner and form in which they intend 
to comply, are complying, and have complied with the Order. Respondents 
shall include in their compliance reports, among other things that are 
required from time to time, a full description of all contacts or 
negotiations with prospective acquirers for the divestiture required by 
this Order, including the identity of all parties contacted. 
Respondents also shall include in their compliance reports copies of 
all written communications to and from such parties, and all internal 
memoranda, reports, and recommendations concerning the required 
divestiture.
    B. Annually, beginning on the first anniversary of the date this 
Order becomes final, and continuing for nine (9) years thereafter, 
respondents shall submit a verified report demonstrating the manner in 
which they have complied and are complying with this Order.

VIII

    It is further ordered that respondents shall notify the Commission 
at least thirty (30) days prior to any proposed change, such as 
dissolution, assignment, sale resulting in the emergence of a successor 
corporation or association, the creation or dissolution of subsidiaries 
or affiliates, or any other change in respondents which may affect 
compliance obligations arising out of this Order.

Appendix I--Agreement to Hold Separate

    This Agreement to Hold Separate (the ``Agreement'') is by and among 
Columbia Healthcare Corporation, a corporation organized, existing and 
doing business under and by virtue of the laws of the State of 
Delaware, with its principal place of business at 201 West Main Street, 
Louisville, Kentucky 40202, and HCA-Hospital Corporation of America, a 
corporation organized, existing and doing business under and by virtue 
of the laws of the State of Delaware, with its principal place of 
business at One Park Plaza, Nashville, Tennessee 37203 (collectively 
and individually referred to as ``respondents''); and the Federal Trade 
Commission (the ``Commission''), an independent agency of the United 
States Government, established under the Federal Trade Commission Act 
of 1914, 15 U.S.C. 41, et seq. (collectively, the ``Parties'').
    Whereas, on or about October 2, 1993, Columbia Healthcare 
Corporation entered into an agreement to acquire all of the voting 
stock of HCA-Hospital Corporation of America (hereinafter the 
``Acquisition''); and
    Whereas, the Commission is now investigating the Acquisition to 
determine if it would violate any of the statutes enforced by the 
Commission; and
    Whereas, if the Commission accepts the attached Agreement 
Containing Consent Order (``Consent Order'') which would require 
divestiture of HCA Aiken Regional Medical Center (``ARMC'') in Aiken, 
South Carolina, the Commission must place the Consent Order on the 
public record for a period of at least sixty (60) days and may 
subsequently withdraw such acceptance pursuant to the provisions of 
Section 2.34 of the Commission's Rules; and
    Whereas, the Commission is concerned that if an understanding is 
not reached, preserving the status quo ante of the assets and 
businesses of ARMC during the period prior to the issuance of the 
Consent Order by the Commission (after the 60-day public notice 
period), divestiture resulting from any proceeding challenging the 
legality of the Acquisition might not be possible, or might be less 
than an effective remedy; and
    Whereas, the Commission is concerned that if the Acquisition is 
consummated, it will be necessary to preserve the Commission's ability 
to require the divestiture of ARMC as described in Paragraph II of the 
Consent Order, and the Commission's right to seek to restore ARMC as a 
viable independent acute care hospital; and
    Whereas, the purpose of this Agreement and the Consent Order is to:
    (i) Preserve ARMC as a viable independent acute care hospital 
pending its divestiture, and
    (ii) Remedy any anticompetitive effects of the Acquisition; and
    Whereas, respondents' entering into this Agreement shall in no way 
be construed as an admission by respondents that the Acquisition is 
illegal; and
    Whereas, respondents understand that no act or transaction 
contemplated by this Agreement shall be deemed immune or exempt from 
the provisions of the antitrust laws or the Federal Trade Commission 
Act by reason of anything contained in this Agreement.
    Now, therefore, the parties agree, upon understanding that the 
Commission has not yet determined whether the Acquisition will be 
challenged, and in consideration of the Commission's agreement that, 
unless the Commission determines to reject the Consent Order, it will 
not seek further relief from respondents with respect to the 
Acquisition, except that the Commission may exercise any and all rights 
to enforce this Agreement and the Consent Order to which it is annexed 
and made a part thereof, and in the event the required divestiture is 
not accomplished, to seek divestiture of ARMC as held separate pursuant 
to this Agreement, as follows:

    1. Respondents agree to execute and be bound by the attached 
Consent Order.
    2. Respondents agree that from the date this Agreement is 
accepted until the earliest of the dates listed in subparagraphs 
2.a-2.c, they will comply with the provisions of paragraph 3 of this 
Agreement.
    a. Three business days after the Commission withdraws its 
acceptance of the Consent Order pursuant to the provisions of 
Section 2.34 of the Commission's Rules;
    b. 120 days after publication in the Federal Register of the 
Consent Order, unless by that date the Commission has issued such 
Order; or
    c. The day after the divestiture required by the Consent Order 
has been completed.
    3. Respondents will hold the assets and businesses of ARMC as 
they are presently constituted separate and apart on the following 
terms and conditions:
    a. ARMC, as it is presently constituted, shall be held separate 
and apart and shall be operated independent of respondents (meaning 
here and hereinafter, respondents excluding ARMC) except to the 
extent that respondents must exercise direction and control over 
ARMC to assure compliance with this Agreement.
    b. Respondents shall not exercise direction or control over, or 
influence directly or indirectly, ARMC or any of its operations or 
businesses; provided, however, that respondents may exercise only 
such direction and control over ARMC as is necessary to assure 
compliance with this Agreement.
    c. Respondents shall maintain the viability and marketability of 
ARMC and shall not sell, transfer, encumber (other than in the 
normal course of business), or otherwise impair its marketability or 
viability.
    d. Except for the single respondent director, officer, employee, 
or agent serving on the ``New Board'' or ``Management Committee'' 
(as defined in subparagraph 3..h), respondents shall not permit any 
director, officer, employee, or agent of respondents to also be a 
director, officer or employee of ARMC.
    e. Except as required by law, and except to the extent that 
necessary information is exchanged in the course of evaluating the 
Acquisition, defending investigations or litigation, or negotiating 
agreements to dispose of assets, respondents shall not receive or 
have access to, or use or continue to use, any ``material 
confidential information'' of ARMC not in the public domain. Any 
such information that is obtained pursuant to this subparagraph 
shall only be used for the purpose set out in this subparagraph. 
(``Material confidential information,'' as used herein, means 
competitively sensitive or proprietary information not independently 
known to respondents from sources other than ARMC, and includes but 
is not limited to customer lists, price lists, marketing methods, 
patents, technologies, processes, or other trade secrets.)
    f. Respondents shall not change the composition of the 
management of ARMC except that the directors or members serving on 
the New Board or Management Committee of ARMC (as defined in 
subparagraph 3.h) shall have the power to remove employees for 
cause.
    g. All material transactions, out of the ordinary course of 
business and not precluded by subparagraphs 3.a-3.f hereof, shall be 
subject to a majority vote of the New Board or Management Committee 
(as defined in subparagraphs 3.h).
    h. Respondents shall either separately incorporate ARMC and 
adopt new Articles of Incorporation and By-laws that are not 
inconsistent with other provisions of this Agreement or establish 
separate business ventures with articles of agreement covering the 
conduct of ARMC in accordance with this Agreement. Respondents shall 
also elect a new three person board of directors (``New Board'') or 
Management Committee (``Management Commenttee'') of ARMC. 
Respondents may elect the directors to the New Board or select the 
members of the Management Committee; provided, however, that such 
New Board or Management Committee shall include no more than one 
respondent director, officer, employee, or agent. Except as 
permitted by this Agreement, the director of the New Board or member 
of the Management Committee who is also a respondent director, 
officer, employee or agent, shall not receive in his or her capacity 
as a New Board director or Management Committee member material 
confidential information and shall not disclose any such information 
received under this Agreement to respondents or use it to obtain any 
advantage for respondents. Said director of the New Board or member 
of the Management Committee who is also a respondent director, 
officer, employee or agent, shall enter a confidentiality agreement 
prohibiting disclosure of material confidential information (as that 
term is defined in subparagraph 3.e). Such New Board director or 
Management Committee member shall participate in matters which come 
before the New Board or Management Committee only for the limited 
purpose of considering a capital investment or other transaction 
exceeding $1,000,000 and carrying out respondents' responsibility to 
assure that ARMC is maintained in such manner as will permit its 
divestiture as an ongoing, viable acute care hospital. Except as 
permitted by this Agreement, such New Board director or Management 
Committee member shall not participate in any matter, or attempt to 
influence the votes of the other directors or Management Committee 
members with respect to matters, that would involve a conflict of 
interest if respondents and ARMC were separate and independent 
entities. Meetings of the New Board or Management Committee during 
the term of this Agreement shall be stenographically transcribed and 
the transcripts retained for two (2) years after the termination of 
this Agreement.
    i. All earnings and profits of ARMC shall be retained separately 
in ARMC. If necessary, respondents shall provide ARMC with 
sufficient working capital to operate at its current rate of 
operation, and to carry out any capital improvement plans for ARMC 
which have already been approved.
    j. Should the Federal Trade Commission seek in any proceeding to 
compel respondents (meaning here and hereinafter respondents 
including ARMC) to divest ARMC, or to seek any other injunctive or 
equitable relief, respondents shall not raise any objection based 
upon the expiration of the applicable Hart-Scott-Rodino Antitrust 
Improvements Act waiting period or the fact that the Commission has 
permitted the Acquisition. Respondents also waive all rights to 
contest the validity of this Agreement.
    4. For the purpose of determining or securing compliance with 
this Agreement, subject to any legally recognized privilege, and 
upon written request with reasonable notice to respondents made to 
their principal officer, respondents shall permit any duly 
authorized representative or representatives of the Commission:
    a. Access during the office hours of respondents and in the 
presence of counsel to inspect and copy all books, ledgers, 
accounts, correspondence, memoranda, and other records and documents 
in the possession or under the control of respondents relating to 
compliance with this Agreement;
    b. Upon five (5) days' notice to respondents, and without 
restraint or interference from respondents, to interview officers or 
employees of respondents, who may have counsel present, regarding 
any such matters.
    5. This agreement shall not be binding until approved by the 
Commission.

Analysis of Proposed Consent Order to Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, and agreement to a proposed consent order from Columbia 
Healthcare Corporation (``Columbia'') and HCA-Hospital Corporation of 
America (``HCA''). The agreement would settle charges by the Federal 
Trade Commission that Columbia's proposed acquisition of 100 percent of 
the voting stock of HCA would have violated Section 7 of the Clayton 
Act and Section 5 of the Federal Trade Commission Act if it had been 
carried out.
    The proposed consent order has been placed on the public record for 
sixty (60) days for reception of comments by interested persons. 
Comments received during this period will become part of the public 
record. After sixty (60) days, the Commission will again review the 
agreement and the comments received and will decide whether it should 
withdraw from the agreement or issue and serve the agreement's proposed 
order.
    Both Columbia and HCA (the ``respondents'') own and operate acute 
care hospitals in various states, including acute care hospitals in a 
three-county urban area that includes the cities of Augusta, Georgia, 
and Aiken, South Carolina (``Augusta-Aiken''). The complaint 
accompanying the proposed consent order concerns the proposed 
acquisition's impact upon competition for acute care hospital services 
in Augusta-Aiken. According to the complaint, Columbia owns and 
operates Augusta Regional Medical Center in Augusta, Georgia. HCA owns 
and operates HCA Aiken Regional Medical Center, located about 15 miles 
northeast of Augusta, Georgia in Aiken, South Carolina.
    The consent order would, if finally accepted by the Commission, 
settle charges that the acquisition may substantially lessen 
competition in the Augusta-Aiken hospital market. The complaint alleges 
that Columbia and HCA are competitors in the market for acute care 
hospital services in Augusta-Aiken. The Augusta-Aiken hospital market, 
according to the complaint, was already highly concentrated, and entry 
by new competitors would be difficult. The complaint alleges that the 
Commission has reason to believe that the acquisition would have 
anticompetitive effects in the Augusta-Aiken hospital market, in 
violation of Section 7 of the Clayton Act and Section 5 of the Federal 
Trade Commission Act, unless an effective remedy eliminates such 
anticompetitive effects.
    The order accepted for public comment contains provisions requiring 
the divestiture of HCA Aiken Regional Medical Center in Aiken, South 
Carolina. The purpose of the divestiture is to ensure the continuation 
of HCA Aiken Regional Medical Center as an ongoing, viable acute care 
hospital independent of Columbia, and to remedy the lessening of 
competition in the Augusta-Aiken hospital market resulting from the 
acquisition.
    The proposed order allows the respondents to divest HCA Aiken 
Regional medical Center to one or more acquirers with the prior 
approval of the Commission. Under the terms of the order, the required 
divestiture would be completed within twelve months of the date the 
order becomes final. If the required divestiture were not completed 
within the twelve-month period, the respondents would consent to the 
appointment of a trustee, who would have eighteen additional months to 
effect the divestiture. The hold separate agreement executed as part of 
the consent order requires the respondents, until the completion of the 
divestiture or as otherwise specified, to hold separate and preserve 
all of the assets and businesses of HCA Aiken Regional Medical Center.
    The proposed order provides that approval by the Commission of the 
divestiture shall be conditioned upon the agreement by the acquirer 
that, for ten years from the date of the divestiture, it will not sell, 
without the prior approval of the Commission, HCA Aiken Regional 
Medical Center to another person operating (or in the process of 
acquiring) any other acute care hospital in the area.
    The order would prohibit the respondents from acquiring any acute 
care hospital in Augusta-Aiken without the prior approval of the 
Federal Trade Commission. It would also prohibit the respondents from 
transferring, without prior Commission approval, any acute care 
hospital they operate in Augusta-Aiken to another person operating (or 
in the process of acquiring) an acute care hospital in the area. These 
provisions, in combination, would give the Commission authority to 
prohibit any substantial combination of the acute care hospital 
operations of the respondents with those of any other acute care 
hospital in Augusta-Aiken, unless the respondents convinced the 
Commission that a particular transaction would not endanger competition 
in the Augusta-Aiken hospital market. The provisions would not apply to 
acquisitions or sales where the value of the transferred assets is $1 
million or less, and the provisions would expire ten years after the 
order becomes final.
    For ten years, the order would prohibit the respondents from 
transferring all or any substantial part of any hospital in Augusta-
Aiken to a non-respondent without first filing with the Commission an 
agreement by the transferee to be bound by the order.
    The purpose of this analysis is to invite public comment concerning 
the proposed order, to assist the Commission in its determination 
whether to make the order final. This analysis is not intended to 
constitute an official interpretation of the agreement and order or to 
modify their terms in any way.
    The agreement is for settlement purposes only and does not 
constitute an admission by the respondents that their proposed 
acquisition would have violated the law, as alleged in the Commission's 
compliant.
Donald S. Clark,
Secretary.

Statement of Commissioner Mary L. Azcuenaga Concurring in Part and 
Dissenting in Part Columbia Healthcare Corp./HCA

    Having reason to believe that the Columbia Healthcare Corporation's 
acquisition of HCA-Hospital Corporation of America may substantially 
lessen competition in the Augusta, Georgia-Aiken, South Carolina 
market, I concur in the decision to require divestiture of the Aiken 
Regional Medical Center. I dissent from the decision not to challenge 
the transaction with respect to the Chattanooga, Tennessee market.
    In Chattanooga, the merger will combine HCA's Parkridge Medical 
Center and Columbia's East Ridge Hospital in an already highly 
concentrated market. In 1985, after a full administrative hearing, the 
Commission ordered HCA to divest certain assets, including North Park 
Hospital, which has considerable similarity to East Ridge. Hospital 
Corporation of America, 106 F.T.C. 361, aff'd, 807 F.2d 1381 (7th Cir. 
1986). Although some characteristics of the Chattanooga hospital market 
may have changed since 1985, I am not persuaded that the competitive 
situation is so fundamentally different to justify abandonment of the 
Commission's earlier position.

Dissenting Statement of Commissioner Deborah K. Owen In the Matter of 
Columbia Healthcare Corporation, et al.

    The Commission is today issuing for public comment a proposed 
consent agreement in connection with the merger of two of the nation's 
largest hospital chains, Columbia Healthcare Corporation (``Columbia'') 
and HCA-Hospital Corporation of America (``HCA''). The proposed consent 
agreement permits the merger to go forward, but requires the combined 
firm to divest one of its two hospitals in the Augusta, Georgia/Aiken, 
South Carolina area. I dissent from the decision to accept this consent 
agreement, principally because I do not find reason to believe that, 
after the merger, anticompetitive effects are likely in that geographic 
market.
    I cannot, however, conclude with reasonable confidence that the 
proposed merger has no anticompetitive effects in any hospital market 
across the country. There is evidence (although incomplete) that in one 
market, the consolidation of the Columbia and HCA hospitals may create 
a monopoly that could injure consumers.
    In that matter, one of the hospitals satisfies the statistical 
criteria for the hospital merger ``safety zone'' as set forth in the 
Statements of Enforcement Policy in the Health Care Area, adopted in 
September 1993 by the Department of Justice and the Federal Trade 
Commission (over my dissent).\1\ Based on its size alone, the 
acquisition of this hospital has been declared by the federal 
enforcement agencies to be immune from antitrust review.\2\
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    \1\Department of Justice and Federal Trade Commission Antitrust 
Enforcement Policy Statements in the Health Care Area, 4 Trade Reg. 
Rep. (CCH)  13,150; Dissenting Statement of Commissioner Deborah K. 
Owen on DOJ/FTC Antitrust Enforcement Policy Statements in the 
Health Care Area (September 14, 1993).
    \2\Department of Justice and Federal Trade Commission Antitrust 
Enforcement Policy Statements in the Health Care Area, 4 Trade Reg. 
Rep. (CCH)  13,150 at 20,757:
    The Agencies will not challenge any merger between two general 
acute-care hospitals where one of the hospitals (1) has an average 
of fewer than 100 licensed beds over the three most recent years, 
and (2) has an average daily inpatient census of fewer than 40 
patients over the three most recent years, absent extraordinary 
circumstances. This antitrust safety zone will not apply if that 
hospital is less than 5 years old.
    It is not clear what constitutes ``extraordinary circumstances'' 
within the contemplation of the Policy Statement. The Commission's 
action today may, however, be viewed as implicit support for the 
proposition that a merger to monopoly does not qualify as an 
``extraordinary circumstance.''
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    This is not to suggest that the Commission is indifferent to the 
monopolization of all hospital markets. Last week, the Commission voted 
unanimously to authorize staff to file a preliminary injunction to 
prevent the merger to monopoly of the only two acute care hospitals in 
Pueblo, Colorado.\3\ In Pueblo, the requirements of the hospital merger 
``safety zone'' were not satisfied, so a full investigation and 
analysis of the likely competitive effects of the merger were 
undertaken, in accordance with the 1992 Horizontal Merger 
Guidelines.\4\ In such a traditional analysis, the Commission considers 
whether the merging hospitals are economically viable, whether 
significant efficiencies may be achieved by combining the hospitals, 
whether these efficiencies are merger-specific, and whether cost 
savings are likely to be passed on to consumers in the form of lower 
prices or higher quality. Most critically, whether the anticipated 
efficiency benefits outweigh the substantial anticompetitive risks 
associated with the creation of a monopoly is also evaluated. Under a 
Guidelines analysis, the Commission's action in the Pueblo merger 
suggests a conclusion that the likely anticompetitive effects outweigh 
the possible efficiencies stemming from the merger.
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    \3\Parkview Episcopal Medical Center, FTC File No. 931-0125.
    \4\U.S. Department of Justice and Federal Trade Commission 
Horizontal Merger Guidelines, reprinted in 4 Trade Reg. Rep. (CCH)  
13,104 (Apr. 2, 1992).
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    The Commission did not, however, conduct a thorough investigation 
of the market in which the merger of Columbia and HCA may have created 
a monopoly. The Commission abandoned its traditional approach to merger 
analysis upon determining that the HCA hospital falls within the 
``antitrust safety zone.''
    In sum, the Antitrust Enforcement Policy Statements in the Health 
Care Area may have claimed their first casualty. Perhaps a full 
investigation would have demonstrated that the merger, though creating 
a monopoly, posed no anticompetitive problem. But we will never know at 
the level of confidence that consumers have a right to expect of us. I 
therefore dissent.