AHA urges Congress to pass SMARTER Act

The AHA Oct. 7 urged Congress to pass the Standard Merger and Acquisition Reviews Through Equal Rules (SMARTER) Act, S. 2102/H.R.2745, legislation that would standardize the merger review process so that the Federal Trade Commission (FTC) would be required to rely exclusively on the federal courts to determine the competitiveness of a merger or acquisition.

The AHA made its case for the legislation in a statement submitted to the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights during the panel’s hearing on the measure.

The SMARTER Act is “narrowly crafted to accomplish one important outcome: to ensure that all proposed transactions face the same enforcement process and standard of review regardless of whether the Federal Trade Commission [FTC] or the Antitrust Division of the Department of Justice [DOJ] reviews the transaction,” the AHA said. “The bill removes a deterrent to hospital integration and realignment, which is essential for success in the changing health care landscape.”

Under existing antitrust law, the FTC and DOJ face different standards in court and use different processes when seeking to prevent a proposed merger or acquisition. The SMARTER Act would require the DOJ and FTC to clear the same bar to win preliminary injunctions against mergers, and would remove the FTC's administrative process for merger challenges after an injunction is denied.

Hospitals have been adversely affected by the FTC’s ability to use its own internal administrative process to challenge a transaction, the AHA said. “The additional time and financial burden of litigating a hospital transaction first at the preliminary injunction hearing and then in internal administrative proceedings has deterred many hospitals from pursuing potentially lawful and procompetitive transactions,” the association stated.

Under the SMARTER Act, both the FTC and DOJ would rely exclusively on the federal court system to determine the competitiveness of a transaction, ensuring “transacting parties, including hospitals, receive a full hearing on the merits,” the AHA said.

The House Judiciary Committee Sept. 30 voted 18-10 to approve H.R. 2745.