Markets Wired

In response to a request by Virginia State Delegate Kathy Byron, the Department of Justice’s Antitrust Division and the Federal Trade Commission (the agencies) have submitted a joint statement to the Virginia Certificate of Public Need (COPN) Work Group suggesting that Virginia consider whether its COPN program best serves the needs of its citizens.  The Work Group is studying possible reform of Virginia’s COPN laws.  Although they vary considerably by state, certificate-of-need (CON) laws, including Virginia’s COPN laws, typically require certain health care providers to obtain state approval before expanding, establishing new facilities or services, or making certain large capital expenditures.

The statement explains that the agencies historically have urged states to consider repeal or reform of their CON laws because they can prevent the efficient functioning of health care markets, and thus can harm consumers. As the statement describes, CON laws create barriers to expansion, limit consumer choice, and stifle innovation. Additionally, incumbent providers seeking to thwart or delay entry by new competitors may use CON laws to that end. Finally, CON laws can deny consumers the benefit of an effective remedy for antitrust violations and can facilitate anticompetitive agreements. Arguments favoring CON laws have not been supported by the evidence.

“Our joint comment reflects the antitrust agencies’ longstanding efforts to promote competition in healthcare provider markets,” FTC Chairwoman Edith Ramirez said. “Because CON laws can make it harder for new healthcare facilities and technologies to enter the marketplace, we are concerned that they may facilitate anticompetitive mergers and conduct that raise prices for consumers and reduce their access to new sources of care.”

The Commission vote approving the comment was 4-0. Commissioner Julie Brill issued a separate concurring comment. (FTC File No. V150011; the staff contacts are Ellen Connelly, Office of Policy Planning, 202-326-2532, and Daniel Gilman, Office of Policy Planning, 202-326-3136.)

The FTC’s Office of Policy Planning works with the Commission and its staff to develop long-range competition and consumer policy initiatives, consistent with the FTC’s unique mission to conduct research and engage in advocacy on issues that affect competition, consumers, and the U.S. economy. The Office of Policy Planning submits advocacy filings; conducts research and studies; organizes public workshops; issues reports; and advises staff on cases raising new or complex policy and legal issues. To reach the Office of Policy Planning, send an e-mail to opp@ftc.gov. Like the FTC on Facebook, follow us on Twitter, read our blogs, and subscribe to press releases for the latest FTC news and resources.