Laws That Govern Joint Ventures

¶ … Laws that Govern Joint Ventures / Competition Over the last several years, the issue of mergers and acquisitions has been increasingly brought to the forefront. Part of the reason for this, is because a number of different companies are seeking out mergers and joint ventures, as a way to address the challenges that they are facing from increased amounts of competition. In health care, various providers have been going through similar kinds of strategies. This is because of: the increasing costs and regulation of the industry.

As a result, the overall profits of the ten largest health care providers have increased by: 428% (between 2000 and 2007). The reason why is because there has been such a sharp increase from: the large number of joint ventures and mergers that have occurred during this time. (Hall, 2009) This is significant, because it shows how this strategy is being utilized as a way, to address the various challenges that are being faced in the industry.

However, recent efforts from the White House are indicating that there will be increased amounts of regulation in the future. This makes any kind of proposed joint ventures and mergers face increased amounts of scrutiny, as the government is concerned about this reducing the amount of choices available to consumers. Therefore, increased vigilance must be utilized, as this will make any changes more difficult. To determine the effect that this will have on the health care facility requires: examining the various laws that govern joint ventures and competition.

Together, these different elements will provide the greatest insights, as to the underlying challenges that could be faced from increased amounts of government regulation. The Laws that Govern Joint Ventures and Competition The overall political environment and the impact of prices on consumers; will play a major role in determining the amount of regulations in the future. This is because, the way the Executive branch is interpreting and enforcing the various laws will have an impact on all mergers / joint ventures.

This means that company will face increased amount scrutiny, for any proposed changes in their business model. (Hewlett, 2004) as a number of different regulations could be used to: limit the kinds of partnerships for health care corporations to include: the Robinson Patman Act and Celler Kefauver Act. ("The Sherman Anti-Trust Act," 2010) The Robinson Patman Act prohibits a corporation from receiving or giving special discounts to select groups of customers.

This is because many corporations will often receive and offer lower discounts, based upon the sales volume that they are receiving from particular customers / suppliers. In the health care environment, this could be challenging as the overall pricing structure will vary for the services provided. As insurance companies and the government will have different rates for the patients using a particular plan.

In the future, this may hinder any kind of joint venture, as this the government could use this act, to claim that the company is offering different prices to customers. At which point, it would be difficult for the facility to justify these kinds of actions. ("The Sherman Anti-Trust Act," 2010) The Celler Kefauver Act gives the government the power to make what is known as mega and vertical mergers.

This is where a company will seek to purchase competitors through: buying the stock of the other company (in the same industry). The idea is that by reducing the total amount of competitors, an organization will be able to have greater control over prices and consumer choices. In the health care industry this is problematic, as any kind of mergers / joint ventures could be considered to be an attempt to restrict choices.

At which point, it is possible that the government could use this law to limit the overall activities of the company. This is because, they could make an effective argument that any kind of reduction in the amount of competition will adversely affect consumers. As the odds increase dramatically, that any attempts to consolidate will be considered to be anti-competitive. Given the fact that costs are increasing, any type of negative reaction could cause the organization, to face increased amounts of scrutiny down the road.

("The Sherman Anti-Trust Act," 2010) When you step back and analyze these different regulations, it is clear that the government could use them as a way to: limit various mergers and joint ventures for health care providers. As a result, the company needs to take these different laws into account and how they could be interpreted. As these two different regulations, are often used as a way to limit a host of mergers and acquisitions.

Therefore, these laws must be taken into account, in an effort to understand how they could have an impact upon the industry in the future. Clearly, the environment for health care providers is changing, as the increases in prices have been forcing the government to focus on this area. As a result, increased amounts of regulations will more than likely be applied very liberally, to any kind of proposed mergers and joint ventures. This is because there.