Anti Trust Essay Example | Topics and Well Written Essays - 750 words

Anti Trust - Essay Example United States of America and State of Michigan V. Blue Cross Blue Shield of Michigan On October 18, 2010, the Attorney General of US and state of Michigan brought civil anti-trust charges against Blue Cross Blue Shield of Michigan (Blue Cross). Blue Cross is one of the biggest independent licensees of the Blue Shield Association (Robinson, 2003, p.102). Blue Cross is a non-profit organization that administers and provides health care reimbursements to over 4 million members in Michigan. It was alleged in the charges that Blue Cross used most favoured nation (MFN) clause in contracts with its member hospitals to enforce monopolistic advantages. The Attorney General defended that such MFN status will hurt competition by Reducing capability other health insurers’ to compete with Blue Cross The clause will also help Blue Cross to raises prices beyond fair value It will create an entry barrier for new entrants MFN status of Blue Cross will raise the health insurance prices in Michi gan Hence, from the above summary of charges of anti-trust against Blue Cross by FTC it can be said that Blue Cross’ MFN status with the hospitals of Michigan are likely to influence anti-competitive effects in the market (Tonn, 2011, pp.1-4). Anti-Trust in Health Care The purpose of anti-trust acts is to encourage a free market place which have competitive environment. These laws are aimed to protect public interest and restrict monopoly practices that adversely affect public in society. The main purpose of such anti-trust law is to encourage best possible allocation of scarce resources and services to public at lowest prices (Ladenburg, 2007, pp.33-35). The federal anti-trust law is based on the following three acts that prohibit all restrictive trade practices and conspiracies in contacts or agreements: The Sherman Act – Under Section 1 of the act, the rule applies to all agreements which may include restrictive trade practices, monopoly practices and boycott of oth er firms, conspiracy to fix price, separate market territories, harm competition and use of coercive tactics. The Federal trade Commission Act – Under Section 5 of the act, the law applies to all types of actions that use unfair advantages and methods of competition. The Clayton Act – Under Section 7 of the act, it prohibits any such merger and acquisition that has the potential to create a monopoly in the market or substantially reduce in the market. Recommendations to Management From the above discussion regarding the anti-trust act against Blue Cross and lessons learned, it can be said that Blue Cross obviously had the market power to its advantage via MFN clause in contract which will further influence sale of health insurance products and services in Michigan. Making such a contract is discouraged by FTC under the anti-trust act in health care organizations. This is because, from the charges and rebuttals charged by the Attorney General on Blue Cross, it is clear that contracts including ‘MFN’ (Most Favoured Nation) status will fall under the purview of the act because of its very nature to of creating anti-competitive environment. In addition, it is also important to note that the senior management must ensure contract or agreement regarding the