Med South: FTC 2002 Advisory Opinion

1
Med South FTC 2002 Advisory Opinion

• Basic Facts Med South is for-profit entity
  formed by a large group of
• primary-care and specialty physicians in Denver
  area to negotiate fee
• arrangements with insurance carriers.
• What had been the prior experience with HMOs in
  the market?
• What were the alleged benefits of this venture?
• Was this venture open to all physicians?
• Would a member physician be free to practice and
  charge outside
• the business scope of the venture?
• Was there any question this was horizontal price
  fixing? Why wasnt
• a straight per se analysis applied?
• What is efficiency-enhancing integration? What
  were the primary
• efficiency factors here?

2
Med South FTC 2002 Advisory Opinion

• How significant was the common computer system?
  What were its
• benefits? Does this confirm that
  technology advances may justify
• more formal, collaborative arrangements
  between competitors?
• What were the primary anticompetitive and
  pro-competitive effects?
• Did Med South have market power?
• What should Med Soft watch out for in moving
  forward?
• Would a court have come to a different
  conclusion that the FTC?
• Does the FTC have more discretion?
• Compare Med South FTC ruling with Supreme Court
  decision in
• Arizona v. Maricopa County Medical
  Society (pg. 105). Are there
• any key differences?

3
General Motors / Toyota Consent Decree
Basic Facts GM and Toyota formed joint venture
to make a small Car (Nova), which would be sold
to GM. Plan to produce 200k cars per year. Cars
would be produced in GMs idle plant in Fremont,
CA. What was GMs and Toyotas market
shares? What was business justification for
joint venture from GM and Toyota
perspective? What restrictions did FTC impose in
its decree? What were three pro-competitive
benefits per Chairman Miller? Did the JV
circumvent import restrictions? Was the dissent
correct is claiming that any automobile JV would
be permitted under new antitrust standard set
by FTC?
4
SCFC ILC, Inc. v. VISA USA, Inc. (10th Cir. 1994)
Basic Facts Sears, through acquisition of SL,
sought to offer VISA card (Premier Option) in
addition to its Discover card. VISA refused,
under its rule 2.06 that prohibited any competing
credit card issuer. Sears sued, alleging Sherman
1 violation for its exclusion from market. Dist.
Ct. held there was Sherman 1 violation. What was
relevant market per District Court? Per 10th
Cir? What were the parties market shares?
What was VISAs justification for its rule of
exclusion?
5
DAGHER v. SAUDI REFINING INC. (SRI) (9TH Cir.
2004)
Basic Facts Texaco and Shell formed national
alliance of two joint ventures - Equilon in
west Motiva in east. SRI was part of Motiva.
Ventures owned all down market refining and
market activities, including refineries, research
labs, thousands of stations, and all
pipeline. Goal was to promote efficiencies
by savings costs and consolidating operations.
Single person had job of setting prices,
which were same for both Shell and Texaco brands
in both markets. West coast station owners
(23k) sued under Sherman 1. What was
standing issue re SRI? How did District Ct.
handle? What was Plaintiffs theory of
liability? Issue for summary judgment? How
did Dist. Ct. decide per se price fixing issue on
summary judgment? Was rule of reason even
an issue? Why Not?