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FTC Orders Dialysis Service Provider to Divest Clinics After Utah Deal, Seek Prior Approval for Any Future Acquisitions

  • The Federal Trade Commission (“FTC”) reached a settlement with dialysis service provider DaVita, Inc. and its wholly owned subsidiary Total Renal Care, Inc. (collectively “DaVita”), to resolve allegations that DaVita’s proposed acquisition of the University of Utah’s dialysis clinics would reduce competition in outpatient dialysis services in the Provo, Utah metropolitan area.
  • The FTC’s complaint alleged that there are only three providers of outpatient dialysis services to patients in the Provo market and that the deal would eliminate direct and substantial competition between two of these providers, thereby creating a monopoly and causing life-threatening impacts to end-stage renal disease patients requiring in-clinic dialysis services.
  • Under the terms of the proposed consent order, DaVita is required to divest three Provo-area dialysis clinics to Sanderling Renal Services, Inc. and provide transition assistance for up to a year after the divestiture. DaVita is also prohibited from directly soliciting patients who receive dialysis services in the divested clinics, and from entering into or enforcing non-compete agreements with employees of the divested or acquired clinics. In addition, DaVita must receive prior approval from the FTC before acquiring any new ownership interest in a dialysis clinic anywhere in Utah for a period of ten years. The order is subject to a 30-day public comment period commencing after its publication in the Federal Register.
  • The FTC also issued a new Prior Approval Policy Statement, announcing that the FTC’s orders will routinely require prior approval for future transactions by acquisitive firms that affect each relevant market for which a violation was previously alleged, for a minimum of ten years.