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AHLA's Speaking of Health Law
The Current Landscape of Health Care Antitrust Enforcement
Herb Allen, Partner, Honigman LLP, speaks with Jeff Oliver, Partner, Baker Botts LLP, about some of the recent developments related to health care antitrust enforcement. They discuss the current team of antitrust enforcers in the Trump Administration, areas where the current administration is continuing the policies of the previous administration (i.e., merger guidelines, HSR form), areas of divergence (i.e., merger remedies, settlements, private equity), and areas of continuity and change regarding non-competes. From AHLA’s Antitrust Practice Group.
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SPEAKER_02:Hello, thanks for joining us on AHLA's Speaking of Health Law podcast. My name is Herb Allen. I am the chair of the Antitrust Practice Group at AHLA and partner at Honigman in Washington, D.C., and I'm joined by one of my colleagues in the AHLA Antitrust Practice Group, Jeff Oliver, who is a partner at Baker Botts and has a lot of experience in healthcare antitrust law. So Welcome, Jeff. Excited to be here and to talk to you about some of the recent developments under the Trump administration in healthcare antitrust.
SPEAKER_01:Yeah. Thanks, Herb. Appreciate the invite to be on the podcast. I'm looking forward to the discussion.
SPEAKER_02:I think we're something like six or seven months into the new administration. And I think we're now starting to see some trends that we can sort of draw some conclusions from and hopefully give some advice to our healthcare clients about sort of how to interact with the agencies and what they might expect when they have a transaction or some kind of an investigation. So let's just start off, Jeff, with a discussion of who the new antitrust team is within the Trump administration. I think one of the really interesting points about this, I think, is how serious all of the antitrust enforcers are. They bring, you know, deep experience at the agencies. Several of them have state antitrust enforcement experience. FTC Chair Andrew Ferguson was the Virginia Solicitor General. Melissa Holyoake was the Utah Solicitor General and oversaw antitrust enforcement in the state of Utah. So I think, you know, really for folks that may be you're seeing podcasters or influencers in other parts of the Trump administration at a high level within antitrust enforcement, it's really our serious people who have deep experience.
SPEAKER_01:Yeah, I think that's a great point, Herb. I mean, particularly, I think DOJ, Gail Slater, who's the AAG over antitrust, I think she, at least in this round of nominees for positions in the administration, Gail had either the highest or the second highest approval when it came to the vote in the Senate. She's one who has just undeniable credibility in antitrust a long background in antitrust, serving on both sides. You know, she was an attorney advisor to a Democrat commissioner at the FTC before she became J.D. Vance's antitrust advisor during the election. And it does seem like the Trump team, as they came into office, put a lot of effort into picking credible and, like, you put it serious candidates for these positions. Yep.
SPEAKER_02:Well, I think the other point about these people and this came through on Gail Slater's confirmation testimony and just public statements that have been made since they've taken office is that all of these new enforcers at the FTC and GOJ are very interested in healthcare. And they see that as an area where really there should be robust enforcement. And I think we're starting to see that the cases. Um, but I'll just, you know, just quote chair Ferguson here. This is something that he said, um, you know, recently is, uh, he said protecting health competition and healthcare markets will be one of the highest priorities of the Trump Vance FTC. Um, and, and Gail Slater echoed that in her confirmation hearing saying that healthcare is one of the industries and sectors that impact the day-to-day lives of the scrutiny, heightened scrutiny in that area.
SPEAKER_01:Sorry, Herb, just one thought I had on that topic. I mean, it's still some of the case, for example, in certain industries that no No leader or even politician gets in trouble when they subject a particular industry to aggressive scrutiny. And for a long time, energy has held that position where, yeah, there's maybe a pro-business slant on one side or the other, but both sides feel entirely comfortable calling for significant scrutiny, just given the strategic nature of the industry. You've seen that also, a kind of consensus around big tech as an industry that both sides just seem to agree demands close scrutiny, whether that's right or wrong, I'll reserve judgment. But healthcare, I think we can now say is squarely in that same bucket where both sides feel entirely liberated in terms of their constituencies supporting an aggressive approach to antitrust.
SPEAKER_02:Yeah, totally agree. And I think we're seeing that in the cases that they're bringing. We'll talk about some of those, but a number of them are in healthcare. And so, yeah, there's continuity, there's bipartisanship in terms of wanting to focus on enforcement in healthcare. So let's talk about some of the other kinds of continuity that I think we're seeing between between the Trump and Biden administration, which again, may be surprising to some folks who would have thought that there would be just sort of a whole new approach. And, you know, Trump has talked about wanting to really deregulate the economy and he's dismantled agencies, CFPB and others that, you know, are charged with, you know, enforcement. But again, we're not seeing that in antitrust. And in fact, there's kind of some really substantial surprising continuity in terms of policies and regulations that the Trump team has endorsed. And let me just talk about the first one and we can discuss a little bit, but it's the Biden era 2023 merger guidelines. And so just to give a quick intro on what that is, merger guidelines are a policy document that the agencies promulgate in order to just really at a very high level describe the analyst tools that the agencies use when evaluating mergers under the antitrust laws. And the Biden 2023 merger guidelines, I think, were really pro-enforcement in a number of ways. They lowered market share thresholds for finding anti-competitive conduct. So, for example, under the new merger guidelines, transactions that result in a 30% share can be presumed to be antitrust. And that's a really significant expansion of what is presumed to be anti-competitive because I think under the prior guidelines, a 30% share would have been presumed lawful in most cases, right? So significant change. Also, the merger guidelines, the new merger guidelines tighten up what you have to show to prove efficiencies. That's sort of a way to defend a merger by showing that there'll be sort of pro-competitive benefits from a transaction. That's tightened up. And then there's also a greater focus on potential competition and innovation markets under the new guidelines. This was an area where I thought maybe we'd see a withdrawal of the Biden era guidelines, but not the case. And in fact, Ferguson said when he took office on X, he posts a lot on He said on X, he said, by and large, the 2023 merger guidelines are a restatement of prior iterations of the guidelines and a reflection of what can be found in the case law. There's good reason to retain them. They're not perfect, he says, but if revisions become necessary, they will consider them down the road through an iterative and transparent revision process.
SPEAKER_01:Yeah. Yeah, I think it was one of the more interesting dynamics in the transition from the prior administration to this one is this question of where they're going to keep these guidelines. The background on them is that the 2023 guidelines were released in a draft form a couple years ago for comment and the initial draft form of the guidelines were so aggressive when it came to applying Section 7 of the Clayton Act to mergers that there was just an almost nuclear response to them from all sides. A lot of aggressive-minded economists and advocates found lots to hate in the guidelines, and there did just seem to be a severe animus toward deals sort of baked into the draft. Some of that stayed. Fortunately, due to that reaction, the final version, the temperature came down quite a bit, at least rhetorically in the guidelines. A lot of more aggressive postures stayed in, like the 30% threshold that you mentioned. It's probably worth mentioning that the guidelines are not law, and despite Ferguson's claim that it's all supported by case law, that 30% is not supported by case law. I can't remember. I'm sure it's happened, but it's very rare that a court would support enforcement action against a deal where the combined shares end up at 30%. It's still a very low threshold. The FTC and Everybody knows that. I don't think I've seen them bring a suit on a transaction at 30%. Nevertheless, it's still a good indicator of when they will issue a second request and when you have a long investigation on your hands. I'll point out just one example of impact and likely influence of the new guidelines. Last month, the FTC sued to block a deal between Edwards and Geneval. These are two companies that make healthcare devices. essentially, medical devices, in this case, particular, quite complicated and innovative devices to treat a kind of rare heart condition. And neither of the products at issue were actually outside of clinical trials yet. They weren't being sold. They were in R&D phase, testing somewhat, but still a ways away from market. That's notable because it's rare that the agencies bring a pure pipeline enforcement action against a deal that is focused solely on where the antitrust issue is focused solely on a pure pipeline product, meaning a product in development and a kind of innovation market. They don't use that word in the complaint on this deal, innovation, but that's what it is. And the effects are all a around kind of what this will do to future competition that doesn't quite exist yet because neither product's being sold. They're the only two companies that are making the product or at least that have the product in development. And the relation of that to the guidelines is that this version of the guidelines spent much more time than its predecessors on this question of how mergers and consolidation can impact the incentive to innovate. And they also explicitly call out a pipeline type market where products that are in development can be the subject of a kind of narrowly defined product market, which the agency under prior leadership had somewhat shied away from. There's a very analogous example in 2004 where two companies who were also creating medical devices Enzyme and Novizyme, they were up for merger and did end up merging. But the merger was subject to an extended investigation and an administration at that point, which was also Republican led, passed on the deal with some commentary around lingering questions about how mergers impact innovation. In other words, Tim Muris, who was leading at the time indicated that he had some doubts about whether you can honestly say consolidation impacts the incentive to innovate. That's a question that the current guidelines put to bed essentially, or at least sort of present as having been settled in the affirmative that the consolidation does negatively impact the incentive to innovate. And I think you could argue that this enforcement effort
UNKNOWN:Thank you.
SPEAKER_01:on the Edwards-Geneval transaction is a result of that added sort of traction on these innovation market and pipeline market questions.
SPEAKER_02:Yeah, I think I agree with all of what you just said. I think the other point I would make is that these are hard cases to win often, and they're hard because you have to show a substantial likelihood that these products that are still in, you know, regulatory review, maybe still in clinical trials, that they're actually going to, that there's a good likelihood that they would ultimately reach the market, right? Yeah. And so that, you know, the defendants can point out all the challenges that are still, you know, still in the way of approval and of commercialization. And, you know, enforcers have to make a strong case that this is not just sort of hypothetical products that may or may not actually reach the market, but they, you know, they really are likely to do so. Yeah. So, yeah. So I, you know, I would say this is, you know, this is the Biden, excuse me, the Trump, the Trump antitrust team bringing a hard case. That's what it looks like to me.
SPEAKER_01:Yeah. An indication that, again, healthcare, they're willing to run some risks. You know, there's, as you saying significant litigation risk in bringing this type of enforcement action and a purely Republican led FTC. I mean, there are no Democrats currently on the commission, although that changes week to week. Sometimes we may talk about that, but that the Republicans unanimously were willing to run this risk with this enforcement action.
UNKNOWN:Yeah.
SPEAKER_02:Well, let's talk a little about HSR. So the HSR Act, folks who do M&A deals will know what that is. It's a statute that requires notification to FTC and DOJ for transactions that are above a certain size threshold. That's currently$126.4 million. So it has to be a sizable transaction to be reportable under the HSR Act. Um and like the process that you described with the merger guidelines, the HSR rules for a number of years under the Biden administration were undergoing kind of draft revisions. And so what happened at the end of the Biden administration, really in the closing days, is that they released new HSR rules that pretty dramatically expanded the information that merging parties have to provide to DOJ under the HSR Act. The agency's own estimate in terms of the added burden on parties is 68 hours of additional time per filer, so a substantial amount of additional work. And especially in deals with overlaps, which may not be overlaps in the same market, but if you have an overlap in the same industry code under these new rules, you have to supply a lot more information about those overlaps about your top customers, about supply relationships, and it really can be a significant lift, which we're seeing with our clients. But again, this is an area where I think you might have expected a Trump FTC and DOJ might have said, you know what, guys, this is more than we need. The old form worked. Let's revert back to that. But we didn't see that. We didn't see that. The Trump FTC and DOJ have said that they are going to continue and they are continuing to use the new form. Another Ferguson ex-post, which I'll read really quickly here, he describes the HSR form, the new form, with all that it requires and all the additional burden, he describes it as long overdue, explaining that the new rules ensure that parties provide appropriate information so law enforcement can fulfill Congress's mandates and prevent unlawful deals from slipping through the cracks. So yeah, another area of perhaps unexpected continuity between Trump and Biden.
SPEAKER_01:Yeah. Yeah, this one really surprised me. I mean, there's explanations, of course, I think to some degree, the new, well, they weren't new commissioners at the time, but under the new leadership in the Oval Office, they had sort of tied their hands because they had already pre-election approved sort of the change after significant and heated, I think, negotiations over what would be included in the new HSR rules. And I think they had agreed to sign on to the new rules after Lena Kahn and the Democrats had agreed to certain compromises on what the new rules would entail. And so they were on record already having signed up to support the new rules. I think it's difficult to overstate for folks on the line who have not yet done a filing under the new HSR rules. It's difficult to overstate how significant the change is and how much more time it takes. Under the old rules, if it was a fire drill, we could probably put a filing together in a matter of days two to three days. It wasn't ideal, but it could be done. You cannot do that anymore and have a credible filing or a defensible filing. The shortest time that we've been able to condense it to is about 15 days, and that's really tight. There's just a lot more docker view, a lot more thought in terms of how to describe the deal and describing what the deal entails in terms of competitive overlaps, that sort of thing. You want to build into your purchase agreements and elsewhere some runway to get that HSR ready for filing. Yeah.
SPEAKER_02:I think the point about what's required now in the narrative response is important because under the prior form, you did not have to affirmatively describe in any great detail the overlap. You didn't have to describe the customer categories, the different products and services and describe them in terms of what are the categories in which the customer views them, you could file and forget. We sometimes did that on deals. You file and forget and if there were questions, assuming it's not a really sensitive deal where you expected problems, you could triage those as they came in. Now all of that is You have to bake that in at the front end.
SPEAKER_01:Yeah, I think that's a really good point and worth emphasizing. What we're finding as we get more experience with the new rules is that on a strategic transaction, meaning a transaction in which there likely is some overlap that you may need to explain to the agency and explain why it's innocuous, you need to understand what arguments you're likely to make about that overlap, what while you're filling out the HSR form, which I think is your point, Herb, that before you could kind of throw your strategy, your substantive strategy with regard to the deal together at the tail end and maybe even after you filed. Now, because you're having to make affirmative statements about those competitive overlaps in the filing and describe it in not excruciating detail, but some level of detail, you need to have your strategy not entirely figured out, but at least thought through such that you're reserving positions and arguments about the overlap when you're just figuring out how to describe it in the filing. Yep.
SPEAKER_02:Well, let's talk about change, right? It hasn't all been continuity. There's some significant changes, some of which I think will be good news to folks listening to this podcast who want to get deals done. And The first one I want to talk a little bit about is greater openness to merger remedies. And so what is a merger remedy? I guess there's really two kinds generally. There's behavioral remedies where the agencies impose some specific conditions on the post-closing behavior of the merged entity. But sort of the more common is what we call a structural remedy where the agencies require usually a divested of some part of the business or locations or perhaps employees. And under the Biden administration, there was a real hostility towards merger remedies writ large. Jonathan Cantor, who was the head of the antitrust division under President Biden, said, I'm concerned that merger remedies short of blocking a transaction too often miss the mark. And he He says, in most situations, we should seek a simple injunction to block the transaction, which is another way of saying you can't fix deals that are partially broken. The preference of enforcers should be to block the whole thing, right? So we saw many fewer settlements, many fewer consent decrees with divestitures or with behavioral remedies. And I think what we're seeing under the new enforcers is a much greater openness to settlements. And I'll just, before I hand it over to you, Jeff, to give your thoughts. Melissa Holyoak recently said that the Biden antitrust team had an unjustified hostility towards divestitures. She expressed hope that the FTC would return to what she called normal operations with regard to divestitures. And she said, where a divestiture can successfully preserve lost competition from the merger, The agency should consider it and focus on the potential benefits to innovation from the remainder of the merger. So potentially a big change here. What are you seeing, Jeff?
SPEAKER_01:Yeah, it's certainly the biggest, I think most significant change from administration to administration. If you look historically, even in the first Trump administration, and that administration was statistically quite aggressive when it came to policing and challenging deals. It was not unusual in that administration and prior to see years in which the agencies combined signed as many as 20 or more consent orders. Just as a point of comparison, under Biden in the last two years, I think the DOJ signed zero consent orders. And before that, the agency signed three or four total, and often they only did so when the judge made clear that they were going to lose at trial. And they then went back and said, okay, let's talk about remedies. So we can avoid a total loss. So it was just almost a non-starter. And certainly toward the end, you just knew that if you had to propose a remedy to get a deal through, that you were going to either have to litigate or be willing to walk away from the transaction to get the transaction done. So to now have the door back swinging again with regard to remedies is a huge change, particularly for anyone who's looking at a strategic transaction that may require a divestiture to get done. The risk profile on those deals has gone down significantly because you will potentially then be able to solve the problem without recourse to a second opinion, meaning a judge. You won't be having to convince a judge that your remedy is justified. You can do that likely at the agency. So just in the last three months, the FTC and DOJ have signed upwards of six consent orders. Significant, again, still not on pace with historical averages, let's say, but getting there and far and above what they were doing under the last administration. Some of those have been in healthcare, like the United Health and Medicine transaction, or I'll let you talk about that one because I represent United in my practice. But others in include the Hewlett Packard Juniper Networks transaction where they actually sued in January to block the deal DOJ did. And then just a month ago or two, they signed a consent order to resolve the competitive issues there. That one's controversial. We'll talk a bit more about the controversy in a minute. Others include Omnicom and let's see, IPG. That one involved advertising and was noteworthy because it was a purely behavioral fix, meaning no divestiture, just parties agreeing to certain behavioral restrictions of things they can and can't do in practice. Those are extremely rare and are likely to stay fairly rare. Both Republicans and Democrats disfavor them, but noteworthy that the Republicans at the FTC were willing to sign a consent order that was purely behavioral. There's a few others I'll say the details, but it's the number of them, and they all came in a rush between June and July, was to this private practice practitioner quite refreshing and a relief to see what seems to me a very reasonable approach, which is if you have a transaction that has an issue that's fixable, let's find ways to avoid wasting resources and time and a lot of money on litigating when the outcome of that litigation is is not sure for either side. Herb, back to you for your thoughts on it.
SPEAKER_02:Yeah, well, I mean, I think you're right. This is a sea change. It is an opportunity for folks, especially in healthcare M&A deals. A lot of our deals are deals that involve markets all around the country, and you may have no competitive issues in 90% of those markets, but if there's an overlap in a couple of places, boy, wouldn't it be nice to be able to get that deal through and divest the facilities or the assets in those few markets where there's an overlap. So I think healthcare, we've got small markets, often local markets. And so you can have a deal that is largely benign, except we're in a few places. And I think it's good to see that we're in a place where there's a receptiveness to an approach that lets you get through you know, the majority of the deal. I'll just say on the, you know, on the Amedisys, UnitedHealth Amedisys deal, and I won't ask you to comment on this, Jeff, but, you know, this really was a significant divestiture. According to the settlement, the DOJ agreed to allow the deal to proceed on the condition that UnitedHealth and Amedisys divest 164 home health and hospice locations across 19 states. And I think it was interesting in the press release, you really see that the DOJ almost bragging about the fact that they had gotten this settlement. And they say that by the number of facilities, this settlement would secure the largest divestiture of outpatient healthcare services to resolve a merger challenge in history. So, you know, again, I think this is an agency that, you know, not just willing to do divestitures, but, you know, potentially touting them when they go. get them as part of a merger investigation.
SPEAKER_01:Yeah. And I think that's an interesting point and an important priority at the current DOJ and FTC, which is one, they want to look aggressive. They believe in stringent application of the antitrust laws, I think genuinely. But they also want to advertise a difference between them and the prior administration across the board, across virtually every aspect of government, particularly in antitrust, I think because the prior administration was so aggressive. I was at a talk yesterday where Gail Slater started the talk by saying that she sees antitrust at a significant inflection point. Now, her saying that doesn't mean it's necessarily true, but it does show that she wants everyone to believe that and I think the way that that they've settled on in in manifesting or kind of marketing their difference from the Biden administration is in their willingness largely in their willingness to consider remedies and it's the easiest way in which they can check both those boxes they can they can brag about you know the pound of flesh they got out of the merging parties and that's a win for the agency they can look to And on the flip side, they can also say, look, we're pro-business. We're working with these parties to transactions. We want to see them grow. We want to see them achieve their strategic initiatives. But we want to see it done in a way that's legal. And we're here to enforce the law. So I think you can expect anyone, again, listening who's looking at strategic transactions, I think you can consider those with a strong hope of there at least being a fix available if you need one.
SPEAKER_02:I'll just add one other area where we're seeing less hostility is in the way the enforcers view private equity. So private equity at the end of the Biden administration came under really a lot of attack, right? And not just because of conduct in a couple of specific cases. But what the agency said is that this business model, the private equity business model has incentives to do things that may lead to problems, market problems, competition problems. And I'll quote Lena Kahn here. She spoke at a workshop on private equity and healthcare very harshly. She was very critical of the private equity industry. She said, short-term, high risk, low consequence ownership by private equity can encourage a flip and strip approach. And she also talks about roll-ups, private equity roll-ups, where private equity firms acquire lots of small participants in a market and sort of through those small acquisitions get market power over time. And we saw cases being brought with a lot of anti-private equity rhetoric. But now I think we're in a different world, right? I think Ferguson, Chair Ferguson has said very clearly that there's no reason for the commission, for the FTC to single out private equity for special treatment. The Welsh Carson case, Jeff, that you're familiar with, which is the anesthesia case, allegations that Welsh Carson, a private equity owner of a national anesthesia practice that they monopolize the anesthesia markets. According to Chair Ferguson, that case was just an ordinary application of Section 7 of the antitrust merger law that applies to serial acquisitions. And he says no reason to single out private equity. So I just add, I think that's another area where, you know, folks who may be doing private equity investment in healthcare, you know, less likely that you're going to see the sort of thumb on the scale against your deal just because the owners happen to be private equity investors.
SPEAKER_01:Yeah. Yeah, I think that's a good point. And certainly one that will be warmly received, I'm sure, by private equity folks in healthcare who it seems, you know, private equity itself is going through a tough time just in terms of returns on investment and that sort of thing. And so this for them is some relief, I think, at least they're not being demonized to the extent they were under the prior administration. Another quick thought on changes and trends and things to think about. I mentioned earlier about the Hewlett Packard, Juniper deal being somewhat controversial. I'll just talk a little bit about what happened there, fallout, what people should think about. The point of contention or controversy there had to do with the parties, I think in this case, Hewlett Packard's use of lobbyists, Trump-aligned lobbyists and advocates who appeared to have essentially gone over staff's head and made their case either to the DOJ front office, Pam Bondi's office, or maybe even all the way to the White House. And it's all sort of rumor and innuendo with some statements from affected officials, but it does seem apparent that that lobbying effort had an impact on the outcome of that case. It certainly had an impact on a few DOJ authorities who were fired due to insubordination and the going theory, I think fairly credible, is that those individuals were opposed to the settlement that the DOJ ultimately reached with the parties and tried to block it using whatever leverage they could, which proved to be insufficient, and then they were fired. So that's an important thing to keep in mind for any party who's considering that route of sort of like a who you know approach to antitrust as opposed to leveraging facts and advocacy. Obviously, I'm biased here. I'm a lawyer, not a lobbyist. And for a long time, I worried that AI would be taking my job, but maybe it's the lobbyists that are going to take my job. I doubt that, honestly. And just a word of caution on that approach. I can't deny that it can be effective and maybe particularly so in this administration. It is always consequential, though, for the parties who take that approach. Once you go above staff's head, and particularly if you go above the divisions, the antitrust divisions head at the DOJ particularly, there's going to be significant fallout as there was here because, you know, Arms are going to get twisted at the agency. People are going to be put in extremely uncomfortable positions. And some, as happened here, may lose their jobs. That leaves a very sour taste among the DOJ staffers. And your brand then at the DOJ takes a pretty significant hit. So if you're a repeat player at the agency, it's worth thinking hard about whether or not you want to pursue a kind of lobbying approach to getting your deal done. done, it may be effective and it may be the right choice, but it does not come without risk, I would say. And I welcome your thoughts on this, Ferb.
SPEAKER_02:Yeah, I mean, it certainly feels like this was sort of the nuclear option in this particular transaction where staff had already reached a decision about where they wanted to go, and that was to litigation. And the higher-ups at DOJ were working with lobbyists sort of came over the top and basically instructed them to take a different approach. I do think when you do the lobbying probably makes a difference, right? I mean, if you're sort of waiting till the very end after staff has reached their decision and you're really trying to get the senior most folks at the Justice Department to reverse something that has already been decided by staff, that may be a more maybe a more challenging approach or a more aggressive way to go about it than trying to influence things earlier on. And I wonder if they did do that. I
SPEAKER_01:think that's a good point, actually. Earlier is better in terms of avoiding the fallout that you saw here. As I said earlier, DOJ had already sued in January to block the deal. And so you're talking six months later than when you're already in front of a judge saying, essentially, you know, there's, and you have staff who's extremely committed to whatever theory they're pushing in front of the judge and the whole, the whole division. And I trust the vision at the agency, obviously now having leveraged all their resources into a litigation posture. There's no way there's, there's no quick route out of that without, you know, significant disagreement at the, at the division level. And so earlier, I think, I think you're right, Herb, an earlier approach to advocacy where you may be able to avoid all of that division fallout would be better.
SPEAKER_02:Yeah. Should we just quickly go over the non-compete developments? We've had a bunch of them in the last month. And early September, the FTC withdrew its defense of the national non-compete ban that was the rule that was promulgated under the Biden administration which means that that national non-compete ban is basically dead. But at the same time, we have the FTC chairman coming out and saying, Chair Ferguson saying that we're going to continue to aggressively enforce the antitrust laws against non-competes. And in fact, last week, Chair Ferguson issued warning letters, pretty strongly worded warning letters to large healthcare companies. And again, this is specific to healthcare. Interesting that Ferguson decided to do this in healthcare. I think it shows the focus on healthcare. But what he said is, available information suggests that many healthcare employers and staffing companies include non-competes that may unreasonably limit employment options for vital roles like nurses, physicians, and other medical professionals. And he calls on healthcare on healthcare companies to do a comprehensive, careful review of their non-competes to make sure that they're not overbroad. And I'll say one more thing. It seems like he's especially worried about non-competes in rural markets. His letter specifically mentions concern in areas where there may already be a shortage of providers of healthcare professionals. So interesting developments there.
SPEAKER_01:Yeah, definitely interesting. And particularly as it comes on the heels of them sort of declining to defend the non-compete rule that the Pire administration had put in place and then was challenged in court. And so there's a bit of a conflicting message there. How much do they care about non-competes? But it's clear, at least in health care, that they still care quite a bit. And health care companies wear non-competes. Non-competes are important and sometimes really quite essential to investing in a new market or building out a new product and practice. There's no doubt that a non-compete allows you to make an investment with a little bit less risk that it's going to be poached from a competitor when they hire your talent. This is not to say that non-competes cannot exist. the boundaries and sort of borders of what's allowable are a bit hazy at the moment, you know, but, but they, a non-compete, there is no blanket ban on non-competes anymore. There, you know, that, that was a rule that was instituted by the Biden administration. And then, like I said, challenged in court, that blanket ban has gone away. But the concern about the effect of non-competes has not. And so it's worth thinking part about what do you need? What do you feel comfortable with in a non-compete? And is there a way to dial, if you have a lot of them, to dial them back in a way that reduces your risk of an extended investigation at the agency?
SPEAKER_02:Yeah, I think in terms of what the substantive law is that will be applied here, this morning letter does not actually contain any new law. It doesn't contain any new statement of when enforcement will happen. There was a recent enforcement involving the pet cremation business where there were some very broad non-competes, national in scope, applied to all of the employees of the sort of dominant company in the pet cremation space. So I think that's an example of where you can expect to see scrutiny, right? If your non-competes apply to everybody, to the janitor, up to the CEO and they're national in scope and they last for a year, that may be something that is overbroad. But I think we're going to have to continue to see what the agencies do in terms of being able to give more specific advice.
SPEAKER_01:Yeah, I
SPEAKER_02:agree. Well, thanks everybody for joining us. Really appreciate Jeff for joining me. We had a good discussion and we'll all stay tuned to more to come. I think we're just seeing the first inklings of what this is all going to look like going forward. Thank you, Jeff.
SPEAKER_01:Yeah, my pleasure. Thank you, Herb. Have a good one.
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