What is the standard for a preliminary injunction under Section 13(b)?

Section 13(b) of the FTC Act authorizes a federal court to enjoin a merger pending the FTC's administrative trial where, weighing the equities and considering the Commission's likelihood of ultimate success, an injunction is in the public interest. The FTC need not prove a Section 7 violation; it must raise questions serious, substantial and difficult enough to warrant a full trial. Because the administrative process takes months and the merging parties usually cannot wait, a preliminary injunction in practice ends most hospital deals.

Why was the proposed divestiture rejected?

Because a divestiture cures a merger's harm only if the buyer can replicate the competition the merger eliminates. The court found that the proposed buyer, a single-hospital operator from another state, lacked the scale, physician network, service lines and payer relationships to constrain the combined system's pricing as the divested hospital had, that the hospital was being sold without the specialty programs that made it a competitor, and that the defendants bore the burden of showing the remedy would work and had not met it.

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N.D. Ill.District courts

Hospital Merger Blocked: Court Rejects Divestiture Fix and Enjoins Deal at FTC's Request

Q: Why does the FTC challenge hospital mergers?

Because hospitals compete for inclusion in insurers' networks, and a merger that removes a close competitor in a local market lets the combined system demand higher reimbursement rates, which flow through to premiums and out-of-pocket costs. Section 7 of the Clayton Act prohibits acquisitions that may substantially lessen competition in any line of commerce in any section of the country. The FTC has blocked or forced the abandonment of hospital mergers in Pennsylvania, Illinois, New Jersey, North Carolina and elsewhere over the past decade, and courts have generally sided with the agency where the merging hospitals were each other's closest substitutes.

Q: What happens after a hospital merger is enjoined?

The parties may appeal the injunction to the court of appeals, proceed to the FTC's administrative trial, or abandon the transaction. Most hospital systems whose mergers have been preliminarily enjoined have abandoned them, because the delay and cost of an administrative trial and appeal exceed the deal's value to them. The parties in this case have said they will appeal to the Seventh Circuit, which upheld an injunction against a Chicago-area hospital merger in FTC v. Advocate Health Care in 2016.

The judge found that selling one hospital to an out-of-state operator would not replace the competition the merger would eliminate, and granted a preliminary injunction under Section 13(b).

Daniel OkaforFederal courts correspondent, New York

Published October 22, 2026, 7:10 PM ET
5 min read

A hospital emergency entrance at night, illustrating the hospital merger blocked by a federal court at the FTC's request — A hospital emergency entrance in suburban Chicago. Photograph: The Counsel

Case details

Court: N.D. Ill. District Court, Northern District of Illinois
Case: FTC v. Greater Lakeshore Health
Bench: Single judge
Docket: No. 26-cv-2211
Decided: October 22, 2026

Key holdings

The relevant market is inpatient general acute care services sold to commercial insurers in a three-county area; the merged system would hold about 58 percent of it, raising a presumption of illegality under Philadelphia National Bank and the 2023 Merger Guidelines.
The defendants' proposed divestiture of one hospital to an out-of-state single-hospital operator would not replicate the lost competition; the burden of proving a remedy's adequacy lies with the merging parties.
Claimed efficiencies were neither verifiable nor merger-specific, and the "weakened competitor" argument did not approach the failing-firm standard.

CHICAGO — A federal judge on Thursday blocked the merger of the two largest hospital systems in a Midwestern metropolitan market, rejecting the parties' offer to sell one of their hospitals to a smaller operator as a cure and granting the Federal Trade Commission's request for a preliminary injunction. The decision in FTC v. Greater Lakeshore Health is the agency's fourth successful hospital merger challenge in three years and the first in which a court has squarely rejected a divestiture proposed by the merging parties before closing.

"A remedy that replaces a competitor with a bystander is not a remedy," the court wrote.

The deal

Greater Lakeshore Health, a seven-hospital system, agreed in 2025 to acquire Northfield Medical Group, which operates three hospitals in the same three-county area, in a transaction valued at about $1.9 billion. The FTC sued in March 2026 under Section 13(b) of the FTC Act to enjoin the deal pending an administrative trial, alleging that the combined system would control about 58 percent of inpatient general acute care services sold to commercial insurers in the area and that Northfield's flagship hospital was Lakeshore's closest competitor for the insurers that cover most of the region's employers. Shortly before the hearing, the parties announced an agreement to sell that hospital to Prairie Crest Health, a non-profit operating a single hospital in a neighboring state, and asked the court to assess the merger as modified.

What the court held

Market definition. The court accepted the FTC's product market — inpatient general acute care services sold to commercial insurers — and its geographic market, defined by asking where insurers would turn if the merged system's hospitals left their networks. The court applied the approach the Third Circuit adopted in FTC v. Penn State Hershey (2016) and the Seventh Circuit in FTC v. Advocate Health Care (2016): patients do not travel far for hospital care, and insurers cannot market a plan in the region without the local hospitals in it.
The presumption. A post-merger share near 58 percent and an increase in concentration well above the thresholds in the 2023 Merger Guidelines established a presumption of anticompetitive effect under United States v. Philadelphia National Bank (1963), reinforced by the FTC's evidence that the two systems' internal documents treated each other as the principal check on their rates.
The divestiture. The court held that the defendants, having proposed the remedy, bore the burden of showing it would restore competition, and that they had not met it. Prairie Crest had never operated outside its home market, had no relationships with the region's insurers or physician groups, and would acquire the hospital without the cardiac and oncology programs that made it a competitor, which Lakeshore would retain. The buyer's own projections showed it needed rate increases to service the acquisition debt. A divestiture to a buyer that cannot compete, the court said, formalizes the harm rather than curing it.
Efficiencies and the weakened competitor. Northfield's claim that it could not survive independently fell well short of the failing-firm defense, and the systems' projected savings were based on management estimates that could not be verified and on consolidations that could be achieved without the merger.
The equities. Because the FTC had shown a strong likelihood of success, the public interest in preserving competition pending the administrative trial outweighed the parties' interest in closing, and the court entered the injunction.

A remedy that replaces a competitor with a bystander is not a remedy.
From the opinion

Why it matters

Hospital systems have increasingly offered divestitures before litigation in the hope of converting a challenge into a negotiated consent, and the FTC has accepted several. The decision confirms what the agency has argued since its rejection of a proposed divestiture in a 2024 North Carolina case: a fix is judged by whether the buyer can do what the divested hospital did, and the parties must prove that it can. It also reaffirms that the insurer-centered approach to geographic markets, which the FTC lost in two cases a decade ago before the appellate courts corrected course, is now settled in the Seventh Circuit. For the FTC, which has lost several merger challenges outside health care since 2024, hospitals remain the area where the courts most consistently accept its theory of harm.

What happens next

The parties have said they will appeal to the Seventh Circuit and seek expedited review; the merger agreement's outside date is in March 2027. The FTC's administrative trial is scheduled for January. Most hospital systems whose mergers have been preliminarily enjoined have abandoned them rather than litigate through both tracks, and analysts expect the same here unless the appeal is heard quickly.

Frequently asked questions

Why does the FTC challenge hospital mergers?

Because hospitals compete for insurers' networks, and a merger of close competitors lets the combined system demand higher reimbursement rates that flow through to premiums. Section 7 of the Clayton Act prohibits acquisitions that may substantially lessen competition in a local market.

What is the standard under Section 13(b)?

An injunction pending the FTC's administrative trial where, weighing the equities and the Commission's likelihood of success, it is in the public interest; the FTC need only raise serious, substantial questions. In practice an injunction ends most hospital deals.

Why was the divestiture rejected?

Because the buyer could not replicate the lost competition: an out-of-state single-hospital operator without payer or physician relationships, acquiring the hospital stripped of its specialty programs, with debt that required rate increases. The parties bore the burden and failed it.

What happens after a hospital merger is enjoined?

Appeal, administrative trial or abandonment; most enjoined hospital systems abandon. These parties say they will appeal to the Seventh Circuit, which upheld the Advocate injunction in 2016.

The Counsel will report the appeal and any decision to abandon the transaction. Employers and insurers in the affected counties should note that the current rate agreements with both systems continue in force regardless of the merger's outcome.

Daniel Okafor

Federal courts correspondent, New York

Daniel covers the Second Circuit, securities litigation and antitrust trials.

This report is for general information only and is not legal advice. Readers should consult a licensed attorney about their own circumstances. Docket numbers and citations are to the official reporters unless otherwise stated.