thank you your honor bob cooper on behalf of sanford and dakota clinic may please the court this case arises in the context of the market realities surrounding the provision of and payment for health care in north dakota a state in which market concentration is not predictive price for the dominant provider of private health insurance and one of the largest health care systems in the country said that it will expand all relevant search specialties in bismarck and if the transaction is consummated the overarching legal issue is what it means for the government to have a market share based rebuttable presumption but still retain the ultimate burden of persuasion on the transactions competitive impact analyzing a prospective transaction is an inherently predictive exercise that prediction cannot be made in the abstract by applying a strict formula rather it must be made by reference to the competitive conditions w transaction is taking place if the government shows a high level of and an increase in concentration in a properly defined market then the rebuttable presumption tethered to those statistics arises if the predictive value of the statistics is undermined then the presumption falls away and so i want to throw you a little bit of a first principle sort of curveball question and that is to return to the text of section seven of the clayton act and in particular more you don't look at the competition you don't look at it at sort of these other things because of the use the word or in between now we don't have a lot of case law in the circuit so my question for you is why wasn't it sufficient just a matter of the length plain language of the but what the statute does not do is say that if a transaction yields a market share of x percent that were greater than it's predicted congress could have or in that statute but they didn't market share is an analytical tool secondly the term an opposite has to be read again against the backdrop not as a pure mathematical calculation but as it's been defined in cases like concorde boat the ability to control prices were exclude competition in this case if the transaction is consummated post merger sanford will have neither ability the ability to control prices or to exclude competition in a properly defined market they would but i guess my question for you then are you answer is not a strict mathematical exercise a presumption can arise from the math just like a presumption can arise from concentration or changes in concentration but that presumption r a starting point the statute is looking alternately to see is tough competition going to be harmed in a properly defined market substantially reduced or a monopoly but the monopoly is not a simple mathematical equation or can use nonstick just to go evidence to meet its ultimate burden but it does so without a presumption of any competitive effects the presumption in claiming that cases arises from the statistics and it's true that most post merger market shares can be a good predictor of what may happen but they're not always a good predictor that's why it's a rebuttable presumption and market share examination is simply an analytical tool which in this case was incorrectly replied and resulted in the district court making several reversible legal in the first of those is that the court improperly shifted the burden of persuasion to defendants in two ways by requiring a clear showing to rebut the presumption secondly by requiring defendants to produce evidence that no anti competitive effects are likely in order to overcome the prime aphasia case the second legal or wish treating the presence of a powerful buyer in this case blue cross in north dakota purely as a defense thus shifting the burden to defendants the third legal or was holding that there is no de minimus exception in any trust law which reads the word substantially out of the claim in the act section that your honor was just quoting in addition the court used a market definition technique that is predicated on the ability of a hypothetical monopolist to successfully impose a price increase on commercial payers because that is the market the government proposed in the court found here commercial payers excluding government payers and the court did this without ever assessing whether such a price increase could be imposed which it could not now there were other legal errors as well and if time permits i will get to those relating to synergies and the dakotas clinics future prospects but the important point to really take away is that individually and collectively these legal and they are legal errors led to a decision the treats the clayton act as a law that prescribes any merger unless the merging parties can prove their transaction is at least competitively neutral that's not the law the law does not demand that private business owners wish to sell a business they created even to a competitor must prove much less clearly show a total absence of any alleged anticompetitive effects now turning back to the burning issue as i said there are two errors embedded in the court's analysis which really permeate everything that the court did force the court erred by requiring defendants to produce evidence that clearly shows no any competitive effects to the defendant this was not a random or accidental decision by the district court the government invited the district court to apply this standard the court accepted the invitation now the government has argued in its brief and undoubtedly you will hear soon that the court didn't really do that but the court did the opinion itself says since the plaintiff of established that the proposed transaction is presumptively illegal the burden shifts to defendants to produce evidence that clearly shows could imply a burden of production at the district court understood it and i don't think it could your honor but i don't think it does for two reasons number one the quotation i believe you're referring to from baker hughes is where the court said the more compelling the prime official case the more evidence the defendant must present to rebut it successfully i think what that means in the context of that case and here is that the more concentrated a post merger market the more compelling evidence a defendant has to present to cast doubt on whether concentration is a good predictive tool that's what we've done here three boasted just a cool and non statistical evidence recall that the presumption itself is created without any reference to whether the statistics are reliable if the statistics show a significant increase in concentration in a properly defined market then the presumption is created but a presumption based on statistics that is subject to rebuttal by showing those statistics are not a good predictor of anticompetitive the facts undermines secondly with respect to then judge thomas justice thomas opinion in baker and use that was written tracing an evolution away from philadelphia national bank and judge thomas then judge thomas excuse me traces through the progression from general dynamics to marine bancorp to cns bank and what that progression shows is that the courts have gone too far and a lessening of the burden i believe is the word the baker of used court did and that makes sense when you go back to where the presumption comes from in philadelphia national bank it is an inference from statistics and let me ask you this if we read it as a burden of production the clear showing language do you disagree especially based on baker his that that would be appropriate in other words that the greater the prima facie case the greater the burden of production on those advocating for the merger slightly disagree i don't think it increases the burden of production i think what it does is increase the type of evidentiary showing that must be made and so in a case like this where there is a statistical analysis done and on re by sanford and medicos expert that shows in comparable markets with comparable shares in comparable practice areas in other north dakota locales like mine not in grand forks there is no correlation between price and concentration i think that is an additional measure of evidence i think where the main hospital system competing against sanford in bismarck and mandan has testified not that they may not that they might but that they will go ahead and expand in each of these service areas and if this transaction happen and indeed has already started doing so i think that rebuts the transaction i think where you have a situation in which blue cross is a dominant provider throughout the state steps to set state wide rates as said in its own words that those rates are set in order to overcome provider leverage blue cross operates effectively like medicare state wide rate everybody pays the same rate everybody can participate in the same programs i think in the face of all that that's not changing the burden of production that is exactly the type of more compelling showing that was talked about in to term briefly to the other players in the market as well i've talked we've talked a little bit about blue cross the other pair there are two other players the second largest one is to sanford health plan and suffice it to say nobody is seriously contending that sanford health plan is looking to raise prices on itself through this transaction the other is medica and that's where the substantially language in the statute comes in medica is a another payer that has a multi state relationship with sanford it doesn't contract for individual services it doesn't contract for individual locations both experts in this case projected a price increase or medica based on model importantly that is a small price increase here it is a price increase that amounts to less than one percent of the overall market this is not a case in which the government has suggested there are separate markets or price discrimination markets or sub markets a market for sanford a market for blue cross the market for america they have lumped them all together and medica represents only five percent of the sorry medicos business with sanford is only five percent of the overall relationship and so there is a de minimus impact projected on medical although none of that economic modeling has any way to account for the overall nature of the relationship moreover the impact small to begin with is significantly reduced as soon as c h i does what it says it will do increase its business and i remember is not some new entrant it's not a start up it is it well established entity in bismarck with a stellar reputation one of the largest health care systems in the country and r is another story of how the burden was shifted not withstanding all of that testimony and we know from cases in the circuit like tenet we know from baker hughes competitors have an interest in downplay what their plans are going to be in the case of  merger c h i said exactly what they were going to do nonetheless the district court required sanford and mid dakota clinic to go ahead and prove affirmatively that there would be sufficient population for that expansion even though one hospital system c h i said they were going to do it and the other sanford has hired twenty four physicians in the last couple of years and announced plans over the next four to hire another hundred thirty six in bismarck  so that's just another illustration of where the burden has been appropriately shifted to sanford and timid dakota clinic to show that they have know that they do clearly show that there are no any competitive are only ten seconds remaining so you probably won't have any rebuttal time but i did want to ask you just one administrative question why did the briefs in this case have to be under seal it's unusual to have a public proceed like this where the whole believe i will have to the part i know and then the part i think is correct the part i know is that during the trial there was a substantial amount of proprietary information related information some proprietary business strategy but mostly related to rates and it various times the court sealed the court room we both sides worked very hard in order to limit the amount that was done and then in the district court the briefing was redacted and there were public filings here my understanding at this court and this is the part i am less certain on is that we were told not to file the redacted briefs on the public record that we were told if the proofs are filed under seal filed that way and do not submit the redacted ones we would be happy to do so we have them and could do it on a moment's notice if your honor would like it done ok it might have been some communication with the clerk's office of which were unaware so thank you for that background  court has recognized that language tend to create a monopoly in this case we have a case that doesn't just tend to create a monopoly it does create a monopoly that hasn't been seriously disputed in one relevant market near monopoly in other relevant markets i think what that language shows is that there are monopolies present a particular concern and the prediction of anti competitive effects from those types of transactions are very very strong because of the complete elimination of competition there needs to be a serious rebuttal to that to undermine the statistical case and moving to the nonstick his tickle evidence in this case where not only did we have an extraordinarily strong statistical case but we had a case that was bolstered by abundant nonstick testicle evidence and economic analysis evidence from market participants from defendants themselves their own business record other insurers in the market that that that bolster the predict the prediction from the ha china bers that the that this case is highly likely to be anti competitive now turning to mr cooper's argument there was no legal error here the court what they're disputing really are factual findings but the district court made walking through all of the evidence very carefully laying it out the government's case there are arguments that their evidence and finding that the case overwhelmingly supported that the evidence that was in the record and interpret in that evidence that legal question what we do with that well our perspective is that there is no meaningful difference in the context of this case in the context of not just a purely statistical case but it case where the statistics and the the compact the prediction of competitive harm is bolstered by abundant other evidence now baker hughes arose in a specific context where the government relied solely on market share statistics and the district court had found that those market share statistics were unreliable predictors of of of competition in the future our market share was volatile shifting and the government did not have undermined those statistics and the court also recognize that the more compelling the primal facia case of the government presents the more evidence the defendants must present to rebut it successfully here the government presented more a more compelling case and i do not believe as mr cooper said that that refers that that is limited that more compelling language is limited to a statistical showing our case was a more compelling statistical showing in terms of the predictive effects that one can one one can figure will come from a complete merger to monopoly but in this case we had evidence that not only supported the  prediction of competitive harm it also anticipated their their rebuttal arguments and and addressed that by putting forward evidence that showed that that to the contrary the things that they said about  entry yeah that that on blue cross several things one is that the record evidence from both blue cross blue shield represented itself and a specific example in the record where it showed that in fact powerful providers notwithstanding the fact that blue cross blue shield uses state wide pricing that that state why pricing accounts for and the level that it sets the state wide pricing accounts for the influence and the demands of powerful providers blue cross blue shield witness testified to that there is in in in addition a specific example of a new york monopolist provider in north dakota that exercised its leverage and this is what the district court found it examined it examined that scenario it heard a defendant's interpretation of that put it looked at the testimony of blue cross blue shield  and it looked at the material relating to that example in it found that that showed that a new york provider can and has exercised leverage to obtain concessions from blue cross blue shield those are the demands the evidence showed in this what the district court found that the effect of money off a list provider leverage may be felt state why by raising rates across the board but but that does not that doesn't undermine the the concentration numbers it just shows that it we would we would put it well first of all i do want to make make sure that we don't forget about medica their blue cross blue shield arguments don't touch medicare they don't touch non profits competition so i can address that further but with regard to c h the legal standard is that entry needs to be and the burden is on them to come forward and show this in order to rebut the vast amount of evidence of harm that the that the government put forward needs to be timely likely and  eye witness testimony testimony of their own doctors of an independent doctor in the community that testified about the obstacles and the length of time that it takes to bring doctors to this sufficiency aspect of it in order to replace lost competition it's not just a matter of coming into the community even if they could over the number of years that the witness from c h i testified come in it would not replace immediately the last competition because you have to build up a patient base you have to build up the relationships a reputation and those those those providers will not be sufficient to replace the lost competition from the existing doctors until that happens and that will happen over multiple more years in addition to just the entry in addition the the question and it is a very real question that was raised by the c h i witness that there is there is doubt as to whether this market is saturated with at least respect to some of these these services and in light of that evidence yes it was incumbent on them if they wanted to prove they are on their rebuttal to present evidence that that addressed that that was not improper burden shifting it was not an improper shifting of the burden of persuasion it was a recognition by the district court that there was evidence presented that call that into serious question and if they wanted to to fully and robu evidentiary showing that the that the government made they should have addressed that and they did not mr cooper so that the f t c actually injected the clearly show standard in the case through its briefing ruled not that provision and as a matter of fact i will note that in their brief opposing preliminary injunction which can be found at docket one seventeen i believe page levon of that p d f they cited the very same language ok so you really are defending that then as the correct standard you're not saying it was wrong but immaterial here you're saying we should reject their argument really shows and say that is the right not if the government that's what a rebuttal case is it's to address the showing that the government made and if the government makes a particularly strong showing as was the case here that's not just a stronomical concentrations statistics in the showing which they've never disputed really there is complete elimination of competition here in one relevant market there is absolutely no no additional competition was there anything else other than the market concentration that was part of the government showing at the prima facia case stage i know you responded to a lot of the arguments that were made by sanford you know the specific arguments always or more that the government can forward  government's economic analysis economic testimony that shows it's not just a matter of concentration but this is how competition in this market works this is how market market power is exercise it's soccer our our economic expert that that if there are if you have the two close competitors unquestionably the parties in this case if if they provide alternative networks that that insurers can turn to one or the other to construct a marketable network when you take that away and there is no alternative that is that augments the bargaining leverage of the evidence about how this market works how competition in this market works and they say they did not credibly they did not present evidence that that convinced the district court that the district court had  alternative explanations they cited to the blue cross blue shield statewide rates that was effectively their argument it's a circular argument because if you don't because if that if that statewide pricing doesn't  obscures the ability of powerful providers to to affect the state wide rates so that strongly bolstered the the the concentration statistics the prediction that will flow from the elimination of these two very close competitors in addition i would like to mention their medical argument there are arguments you know they try to sweep that under the rug say you can ignore unquestionable it is the elimination of really the only competitor in some of these service markets that is elimination of competition our evidence showed from from from the economic testimony from the percent of the market would next would possibly have to raise prices so this market doesn't necessarily it's a piece of evidence but that doesn't necessarily lead to the conclusion that this is this merger is anti competitive does it it it again we're talking at the preliminary injunction stage of of predictions of what what will likely happen or you know in this case it bolsters the the concentration analysis and in addition this is market wide this is not just blue cross blue shield or the non a price effect in that in this case which will affect the entire population based and all of the insurers and there is direct head to head competition for patients which unquestionably in the district court made factual findings factual findings seventy nine eighty eighty one and in its in its decision that there has been head to head competition that has spurred each of them to invest in new technology to expand service please call the next case for argument