A Superficial Analysis of Competitive Foreclosure Won't Play in Peoria

A federal trial court rejected a hospital's antitrust claims that it was substantially foreclosed from the market by its rival's exclusive contracts with payors. The court concluded that foreclosure in healthcare services markets must be evaluated at multiple levels of competition. Although the decision focuses on the healthcare market from a provider's perspective, it also offers useful insights for payors:

• Exclusive payor-provider contracts are presumptively permissible where they foreclose less than 30-40% of the relevant market;
• Only unlawful foreclosure is relevant from an antitrust perspective. Even if an exclusive contract restricts competition in some respects, there may still be competition for the exclusive contracts themselves and at other levels of the distribution chain;