[Federal Register Volume 82, Number 63 (Tuesday, April 4, 2017)]
[Notices]
[Pages 16401-16403]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-06556]



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FEDERAL TRADE COMMISSION

[File No. 151 0204]


DaVita, Inc., RV Management Corp., Renal Ventures Partners, LLC, 
Renal Ventures Limited, LLC, and Renal Ventures Management, LLC; 
Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair methods of competition. 
The attached Analysis to Aid Public Comment describes both the 
allegations in the complaint and the terms of the consent order--
embodied in the consent agreement--that would settle these allegations.

DATES: Comments must be received on or before April 27, 2017.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/davitarenalconsent online or on paper, 
by following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``In the Matter of 
DaVita, Inc., RV Management Corp., Renal Ventures Partners, LLC, Renal 
Ventures Limited, LLC, and Renal Ventures Management, LLC., File No. 
151-0204'' on your comment and file your comment online at https://ftcpublic.commentworks.com/ftc/davitarenalconsent by following the 
instructions on the web-based form. If you prefer to file your comment 
on paper, write ``In the Matter of DaVita, Inc., RV Management Corp., 
Renal Ventures Partners, LLC, Renal Ventures Limited, LLC, and Renal 
Ventures Management, LLC., File No. 151-0204'' on your comment and on 
the envelope, and mail your comment to the following address: Federal 
Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., 
Suite CC-5610 (Annex D), Washington, DC 20580, or deliver your comment 
to the following address: Federal Trade Commission, Office of the 
Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite 
5610 (Annex D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Lisa DeMarchi Sleigh (202-326-2535), 
Bureau of Competition, 600 Pennsylvania Avenue NW., Washington, DC 
20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned consent agreement 
containing consent orders 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 thirty (30) days. The 
following Analysis to Aid Public Comment describes the terms of the 
consent agreement, and the allegations in the complaint. An electronic 
copy of the full text of the consent agreement package can be obtained 
from the FTC Home Page (for March 28, 2017), on the World Wide Web, at 
http://www.ftc.gov/os/actions.shtm.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before April 27, 2017. 
Write ``In the Matter of DaVita, Inc., RV Management Corp., Renal 
Ventures Partners, LLC, Renal Ventures Limited, LLC, and Renal Ventures 
Management, LLC., File No. 151-0204'' on your comment. Your comment--
including your name and your state--will be placed on the public record 
of this proceeding, including, to the extent practicable, on the public 
Commission Web site, at https://www.ftc.gov/policy/public-comments. As 
a matter of discretion, the Commission tries to remove individuals' 
home contact information from comments before placing them on the 
Commission Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone's Social Security number, 
date of birth, driver's license number or other state identification 
number or foreign country equivalent, passport number, financial 
account number, or credit or debit card number. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which . . . is privileged or confidential,'' as discussed in Section 
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 
4.10(a)(2). In particular, do not include competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.
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    \1\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/davitarenalconsent by following the instructions on the web-based 
form. If this Notice appears at http://www.regulations.gov/#!home, you 
also may file a comment through that Web site.
    If you file your comment on paper, write ``In the Matter of DaVita, 
Inc., RV Management Corp., Renal Ventures Partners, LLC, Renal Ventures 
Limited, LLC, and Renal Ventures Management, LLC., File No. 151-0204'' 
on your comment and on the envelope, and mail your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
600 Pennsylvania Avenue NW., Suite CC-5610 (Annex D), Washington, DC 
20580, or deliver your comment to the following address: Federal Trade 
Commission, Office of the Secretary, Constitution Center, 400 7th 
Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC. If 
possible, submit your paper comment to the Commission by courier or 
overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before April 27, 2017. You can find more information, 
including routine uses permitted by the Privacy Act, in the 
Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

Analysis of Agreement Containing Consent Order To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Order (``Consent 
Agreement'') from DaVita, Inc. (``DaVita''). The purpose of the Consent

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Agreement is to remedy the anticompetitive effects resulting from 
DaVita's purchase of Renal Ventures Management, LLC from Renal Ventures 
Limited, LLC, which is owned by RV Management Corp. and Renal Ventures 
Partners, LLC (together, ``Renal Ventures''). Under the terms of the 
Consent Agreement, DaVita is required to divest seven dialysis clinics 
in seven markets across the United States.
    The Consent Agreement has been placed on the public record for 30 
days to solicit comments from interested persons. Comments received 
during this period will become part of the public record. After 30 
days, the Commission will again review the Consent Agreement and the 
comments received, and will decide whether it should withdraw from the 
Consent Agreement, modify it, or make final the Decision and Order 
(``Order'').

The Transaction

    Pursuant to an agreement dated August 17, 2015, DaVita proposes to 
acquire all issued and outstanding equity interests in Renal Ventures 
in a transaction valued at approximately $358 million. The Commission's 
Complaint alleges that the proposed acquisition, if consummated, would 
violate Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and 
Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 
45, by substantially lessening competition for the provision of 
outpatient dialysis services in seven markets.

The Respondents

    Headquartered in Denver, Colorado, DaVita is the second-largest 
provider of outpatient dialysis services in the United States. DaVita 
operates or manages 2,251 outpatient dialysis clinics in forty-six 
states and the District of Columbia at which approximately 180,000 end 
stage renal disease (``ESRD'') patients receive treatment. In 2015, 
DaVita's revenues were approximately $13.8 billion.
    Renal Ventures, headquartered in Lakewood, Colorado, is a privately 
held company and the seventh-largest provider of outpatient dialysis 
services in the United States. Renal Ventures operates thirty-six 
dialysis centers, providing dialysis services to approximately 2,300 
patients in six states. In 2015, Renal Ventures' revenues were 
approximately $161 million.

The Relevant Product and Structure of the Markets

    Outpatient dialysis services is the relevant product market in 
which to assess the effects of the proposed transaction. For patients 
suffering from ESRD, dialysis treatments are a life-sustaining therapy 
that replaces the function of the kidneys by removing toxins and excess 
fluid from the blood. Kidney transplantation is the only alternative to 
dialysis for ESRD patients. However, the wait-time for donor kidneys--
during which ESRD patients must receive dialysis treatments--can exceed 
five years. Additionally, many ESRD patients are not viable transplant 
candidates. As a result, ESRD patients have no alternative to dialysis 
treatments. Unless hospitalized, ESRD patients must obtain dialysis 
treatments from outpatient dialysis clinics.
    Because most ESRD patients receive outpatient dialysis treatment 
three times per week in sessions lasting between three and five hours 
the relevant geographic markets are local and limited by the travel 
distance from patients' homes. ESRD patients are often very ill and 
suffer from multiple health problems, making travel further than thirty 
miles or thirty minutes very difficult. As a result, competition among 
dialysis clinics occurs at a local level, corresponding to metropolitan 
areas or subsets thereof. The exact contours of each market vary 
depending on traffic patterns, local geography, and the patients' 
proximity to the nearest center.

Competitive Effects of the Acquisition

    Each of the seven geographic markets identified in the Complaint is 
highly concentrated. In each of the affected markets, the proposed 
acquisition would cause the number of providers to drop from three to 
two or cause a merger to monopoly, and the post-acquisition HHI levels 
to exceed 5,000, and in the three-to-two provider markets, changes in 
their HHIs greater than 200. The high post-acquisition concentration 
levels, along with the elimination of the head-to-head competition 
between DaVita and Renal Ventures, suggest the proposed combination 
likely would result in higher prices for outpatient dialysis services 
in each geographic market. In addition, market participants compete for 
patients on a number of quality measures--including quality of 
facilities, wait times, operating hours, and location. The proposed 
combination likely also would result in diminished service and quality 
for patients in each market.

Entry

    Entry into the outpatient dialysis services markets identified in 
the Commission's Complaint is not likely to occur in a timely manner at 
a level sufficient to deter or counteract the likely anticompetitive 
effects of the proposed transaction. By law, each dialysis clinic must 
have a nephrologist medical director, and most dialysis clinics have 
long-term (seven to ten year) contracts with nephrologist medical 
directors, that also include non-competes. As a practical matter, 
medical directors also serve as the primary source of referrals and are 
essential to a clinic's success. The relative shortage and lack of 
available nephrologists, particularly those with an established 
referral stream, is a significant barrier to entry into each of the 
relevant markets. These obstacles make entry in the affected markets 
more challenging and less likely to avert the anticompetitive effects 
of the transaction.

The Consent Agreement

    The Consent Agreement remedies the proposed acquisition's 
anticompetitive effects in seven markets where both DaVita and Renal 
Ventures operate dialysis clinics by requiring DaVita to divest seven 
outpatient dialysis clinics to PDA-GMF Holdco LLP, a joint venture 
between Physicians Dialysis and GMF Capital LLC (``PDA''). Physicians 
Dialysis has been in business since 1990 and currently operates several 
outpatient dialysis clinics. The Commission is satisfied that PDA is a 
qualified acquirer of the divested assets.
    As part of the divestitures, DaVita is required to obtain the 
agreement of the medical director affiliated with each divested clinic 
to continue providing physician services after the transfer of 
ownership to the buyer. Similarly, the Consent Agreement requires 
DaVita to obtain the consent of all lessors necessary to assign the 
leases for the real property associated with the divested clinics to 
the buyer. These provisions ensure that the buyer will have the assets 
necessary to operate the divested clinics in a competitive manner.
    The Consent Agreement contains several additional provisions 
designed to help ensure the continued competitiveness of the divested 
clinics. First, the Consent Agreement provides the buyer with the 
opportunity to interview and hire employees affiliated with the 
divested clinics and prevents DaVita from offering these employees 
incentives to decline the buyer's offer of employment. This helps 
ensure the buyer has access to patient care and supervisory staff 
familiar with the clinics' patients and the local physicians. Second, 
the Consent Agreement prevents DaVita from contracting with the medical 
directors affiliated with the divested clinics for three years, to 
prevent DaVita from

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potentially limiting the competitiveness of the divested clinics. 
Third, to ensure continuity of patient care and records as the buyer 
implements its quality care, billing, and supply systems, the Consent 
Agreement requires DaVita to provide transition services for a period 
up to twenty-four months. Firewalls and confidentiality agreements will 
prevent the exchange of competitively sensitive information. Fourth, 
the Consent Agreement requires DaVita to provide the buyer with a 
license to Renal Ventures' policies, procedures, and medical protocols, 
as well as the option to obtain and use DaVita's medical protocols, 
policies, and procedures, to help with continuity of care for the 
divested clinics' patients.
    The Consent Agreement requires DaVita to provide notice to the 
Commission prior to any acquisitions of dialysis clinics in the markets 
addressed by the Consent Agreement to ensure that subsequent 
acquisitions do not adversely impact competition in those markets or 
undermine the remedial goals of the proposed order. Finally, the 
Consent Agreement allows the Commission to appoint a monitor to oversee 
DaVita's compliance with the Consent Agreement.
    The purpose of this analysis is to facilitate public comment on the 
Consent Agreement, and it is not intended to constitute an official 
interpretation of the proposed Decision and Order, or to modify its 
terms in any way.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2017-06556 Filed 4-3-17; 8:45 am]
 BILLING CODE 6750-01-P