US FTC drops appeal to stop LabCorp and Westcliff merger

The US Federal Trade Commission has withdraw its appeal Laboratory Corporation of America’s (NYSE: LH) 2010 $57.5 million acquisition of Westcliff Medical Laboratories (The Pharma Letter December 3, 2010). Although LabCorp consummated the acquisition in June 2010, the FTC was seeking the federal court injunction to prevent LabCorp from integrating the companies pending the outcome of administrative litigation. The FTC also has withdrawn the matter from administrative adjudication - a step that stops the trial proceedings, but does not conclude the case.

In its administrative complaint, issued on December 1, 2010, the FTC charged that LabCorp’s acquisition of Westcliff, which was completed June 16, 2010, violated antitrust laws and would lead to higher prices and lower quality in the Southern California market for the sale of clinical laboratory testing services to physician groups. The complaint also alleged that the acquisition would leave only two significant laboratories in Southern California competing to provide critical testing services to most physician groups.

The Commission vote authorizing the withdrawal of the pending appeal was four to one, with Commissioner Julie Brill dissenting and issuing a separate statement. In her dissenting statement, Commissioner Brill discussed “important principles of merger law” at issue in the case that, in her view, “merit an appeal.”