MERGER BURDEN SHIFT? The Federal Trade Commission recently finalized new rules that expand requirements for companies across sectors to notify the agency and the Justice Department of significant mergers in a move that could have a considerable impact on health care companies, Ben reports. When they go into effect in mid-January, the rules seek to dramatically increase the information companies must provide about mergers. They’ll apply to hospitals, pharmaceutical companies, tech firms and providers in deals over a certain financial threshold. Transparency vs. innovation: The rules are a game-changer that supporters say will require companies to be more transparent and take the burden off regulators in trying to prevent illegal mergers and acquisitions. Opponents argue they’ll stifle innovation. Companies will have to disclose the reasoning behind the transactions and any product overlaps or vertical ties, including providing additional documentation about transactions or face potential civil penalties. Vertical mergers occur between companies at different levels of supply chains. “It front-loads a lot more work than we’ve had in the past,” Jon Dubrow, partner at McDermott Will and Emery, said, which will make it easier for regulators to detect vertical relationships. “Between the merger guidelines that came out at the end of last year and these new rules, there is a very strong finger on potential or emerging competition.” Heightened scrutiny: The FTC and the DOJ signaled a more aggressive stance last year in their merger guidelines, which the pharmaceutical industry took issue with. The moves are part of a heightened enforcement posture from FTC Chair Lina Khan, who has scrutinized consolidation in the sector. The FTC said the changes would help ascertain which deals warrant antitrust investigation. “This rulemaking is a much-needed update to address changes in the marketplace that have undermined the agencies’ ability to detect and prevent illegal mergers,” said Shaoul Sussman, associate director for litigation at the FTC’s Bureau of Competition. The support: The American Economic Liberties Project, an advocacy group that tries to counter concentrated corporate power, said the move will help shift the burden to merging companies instead of “underfunded, under-resourced antitrust agencies.” “The decades-long underenforcement of federal antitrust laws has resulted in excessive corporate consolidation, giving corporations free rein to wield monopoly power,” the group said in a paper. The skepticism: The Partnership for the U.S. Life Science Ecosystem, which includes pharmaceutical and life sciences companies — some of which have faced antitrust scrutiny — said the rule could undermine competition that drives biopharmaceutical breakthroughs. “Those bearing the brunt of these new restrictions are small, early-stage companies in the U.S. which not only make up the vast majority — more than 85 percent — of the world’s biopharmaceutical companies, but which also frequently operate without a profit,” the group said in a statement. The American Hospital Association also hammered the rules, calling them “flawed and pointless.” “It functions as little more than a tax on mergers,” AHA general counsel Chad Golder said in a statement. “The agency already has more than enough information about hospital transactions, and it has shown no hesitation in challenging them.” WELCOME TO TUESDAY PULSE. I’m Carmen Paun, POLITICO’s global health reporter, filling in for Ben and Chelsea. Who thought that caffeine, which pregnant women are advised to stay away from, could help prevent cerebral palsy if given to the expectant mother and the newborn? Send your tips, scoops and feedback to cpaun@politico.com and follow along at @carmenpaun. And don’t forget to send your ideas to our regular Pulse hosts at bleonard@politico.com and ccirruzzo@politico.com, and follow them @_BenLeonard_ and @ChelseaCirruzzo.
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