Louisiana Health Care Association

i%D 	~ A O ECOMMISSOGil
WLISnlNGTBN. 8. C 	20580
w-
APR 2 3 !on7
Steven 	E. 	A d m s , 	J.D.
Oirector 	of 	Governmental 	Relations
L o u i s i a n a 	R e 9 l t h 	C a r e Association
7921 	P i c a r d y 	A v e n u e
B a t o n 	R o u g e , 	LA 	1 0 8 0 9 	.:-..
Re: 	Reques.t 	for 	Advisory 	O p i n i o n
D e a r 	MF 	A d m s ::	I
T h i s 	is 	in 	response 	to 	your 	letter 	to 	Ben 	S h a r p 	of 	August
18, -1981,. eeques.ting 	an-advisory 	opinion 	on 	a 	proposed 	agreement
between 	the Louisiana 	Health 	C a r e 	Association 	( t h e * A s s o c i a t i o n n )
and 	Medi 	Co-op, 	Ine. 	( t h e "Co-opn) 	t~ 	establish 	a 	group
purchasing 	arrangement 	for 	the Association" 	mmebers.
Pursuant 	to 	your 	telephone 	conversation 	with 	Judith 	A.
Moreland 	of 	the 	Bureau 	of 	Competition, 	w e 	are 	treating 	your
request 	4s 	o n e 	for 	a 	staff 	opinion 	letter 	under 	Section 	l.l(b) 	o f
the C o m n i s s i o n f s Rules 	of 	Practice.-
T h i s 	letter 	sets 	out 	the 	views 	of .the staff 	of 	the 	Bureau 	o f
Competition, 	as 	authorized 	by 	the 	C 	ission" 	rules. 	I t 	has 	not
been 	reviewed 	or 	approved 	by 	the C o m i s s i o n . 	The 	Bureau's 	advice
is 	rendered 	without 	prejudice 	to 	the 	right 	o f 	the C o m i s s i o n
later 	to 	rescind 	i t 	and, 	where 	appropriate, 	to 	c o m e n c e 	an
enforcement 	p r o c e e d i ~ g .
A s 	we 	u n d e r s t a n d 	it, 	Medi 	Co-op 	proposes 	to 	administer 	a
buying 	c o o p e r a t i v e 	available 	to members 	o f 	the Association, 	woo
are 	nursing 	home 	owners 	and 	operators 	throughout 	the 	State 	o f
Louisiana. 	T h e 	Co-op 	would 	maintain 	a 	staff 	and 	warehouse
facilities 	in 	the 	state. 	Association 	officers 	would 	sit 	with 	the
Co-op" 	General 	& M n a g e r on 	a 	review 	cornnittee 	to 	oversee 	the
Co-op" 	aectivi ties.
F o o d 	and 	medical 	equipment 	would 	be 	available 	through 	the
Co-op, 	but 	m e m b e r s 	would 	be 	free 	to 	purchase 	these 	products 	f r o m
other 	sources. 	Food 	purchased 	through 	the Co-op 	would 	be
delivered 	directly 	to members 	by 	existing 	wholesalers 	and
0 suppliers. 	Members 	would 	be 	charged 	"prevailing 	pricesn 	b y 	Medi
Co-op 	at 	the 	time 	o f 	purchase. 	Quantity 	discounts 	received 	by
the Co-op 	would 	be 	divlded 	between 	the Co-op, 	the .Association,
and 	the m e m b e r s 	on 	a 	quarterly 	basis, 	with 	20% 	retained 	b y 	the
3

$.0-op, 	5% 	given 	to 	the Association 	for 	administrative 	services,
and 	15% 	distributed 	among 	the members, 	pres 	blg 	in 	proportion
to 	their 	purchases 	through 	the C o - o p e
o n l y 	used 	medical 	supplies 	and 	e q u i p e n t 	would 	be
s t o c k e d 	in 	the C o - o p t s warehouse. 	Other 	products 	could 	be
o b t a i n e d 	through 	the Co-op 	from 	"regional 	supply 	points."
S a v i n g s 	realized 	from 	quantity 	discounts 	and 	by 	"eliminating
m i d d l e 	comnissionsn 	would 	be 	distributed 	among 	the 	garties 	in
the 	proportions 	listed 	above.1 \
G r o u p 	insurance 	policies 	would 	also 	be 	available 	through 	the
Co-op. 	The Association 	would 	received 	25516 	of 	e 	issions 	paid 	to
the Co-op,
The 	l a w s 	a h i n i s t e a e d 	by 	t3e C 	iision 	do 	ndt'prahibi t 	t.he
f o e m a t i o n 	of 	cooperative 	buying 	associations, 	S u c h 	organizations
s e r v e 	legitimate 	purposes, 	and 	in most 	eases 	can 	be 	expected 	to
facilitate 	rat he^ 	than 	to 	impair 	competition, 	H o w e v e r , 	in 	s o m e
circumstances 	these 	organizations 	may 	engage 	in 	conduct, 	or
a t t a i n 	a 	degree 	of 	market 	power, 	that 	raises 	concerns 	under 	the
anti trust 	laws.
Thr-i-nf orma t i-on-you-.have-pr ov-id 	'r..not sufficient 	to
give 	a 	definitive 	o p i n i o x h e 	legal i ty 	of 	the
Co-op's 	intended 	activities. 	M a k i n g 	that 	judgment 	would 	require
knowledge 	of 	a 	number 	of 	factors, 	including 	the 	types 	of
discounts 	received 	by 	the Co-op,'the 	prices 	i t 	eharged 	its
m e m b e r s , 	the. distributive 	functions 	performed 	by 	the Co-op, 	the
market 	power 	of 	its members, 	the 	availability 	of 	similar
discounts 	to 	other 	nursing 	home 	operators, 	and 	the 	impact 	of 	the
Co-op 	on 	competition 	in 	the market 	in 	which 	its m e m b e r s 	b u y 	and
sell. 	However, 	w e 	can 	identify 	the major 	issues 	that 	are 	raised
under 	the Robinson-Patman 	and 	Federal 	T r a d e 	C o m i s s i o n 	Acts 	by.
buying 	c o o p e r a t i v e s - l i k e the Co-op.
T h e 	Co-op 	suggests 	that 	Association 	m e m b e ~ s c a n 	save money 	b y
reporting 	as 	an 	n e x p e n s e 	reduction" 	on 	Medicaid 	year-end
reports 	only 	the 	percentage 	of 	the 	discounts 	distributed 	b y
the Co-op 	that 	is 	attributable 	to 	supplies 	purchased 	for
M e d i c a r e 	patients, 	and 	by 	directly 	billing 	M e d i c a r e 	patients
f 	o 	~catheter 	and 	ostomy 	supplies 	through 	an 	arrangement 	wi th
a 	Co-op 	contractor. 	T h e 	staff 	of 	the H e a l t h 	C a r e 	Financing
Administration 	has 	informally 	advised 	us 	that 	a 	nursing 	home
that 	follows 	these 	suggestions may 	violate 	regulations
governing 	Medicare 	and 	Medicaid 	reimbursement. 	T h e
Association 	and 	its 	m e m b e r s 	may 	wish 	to 	inquire 	further
before 	using 	the 	reporting 	and 	billing 	methods 	described
above.
1

T h e Robinson-Patman 	Act
S e c t i o n 	2(f) 	of 	the C l a y t o n 	Act, 	as 	m e n d e d 	by 	the Robinson-
P a w n Act, 	u.S.C- 	l3(f), 	prohibits 	knowing 	i n d u c m e n t 	or
reecipt 	of 	price 	discriminations 	that 	violate 	Section 	2(a) 	of
that 	Act. 	S e c t i o n 	2(a) 	m a k e s 	unlawful 	direct 	or 	indirect
discriminations 	in 	the 	price 	of 	c 	odi ties 	of 	1 ike 	grade 	and
quality, 	where 	the 	effect 	of 	the 	discrimination 	m a y 	be
substantially 	to 	lessen 	competition 	or 	to 	tend 	to 	cpeate 	a
monopoly, 	or 	to 	injure 	competition 	with 	any 	person 	w h o 	gran
knowingly 	receives 	the 	benefit 	of 	the 	discrimination, 	or 	wi
their 	customers. 	15 	O.S.C, 	S 	l3(a). 	M e m b e r s 	of 	buying
cooperatives 	have 	been 	found 	to 	violate 	S e e t i o a 	2(f) 	when 	they
indirectly 	received 	certain 	quantity 	and 	functional 	discounts
g r a n t e d 	to 	the 	cooperatives.
In 	three 	eases 	brought 	by 	the C 	ission, 	a u t o 	parts 	jobbers
who 	established 	buying 	eoaperatives 	order 	to 	take 	advantage 	o f 	- --
manufacturers' 	quantity 	discounfs 	w e r e 	found 	to 	have 	violated
Section 	2(f). 	, 309 	F.2d 	213 	( 9 t h
their 	orders 	in 	the 	name 	o f 	the 	cooperative, 	but 	the 	goods 	were
drop-shipped 	directly 	to 	each 	buyer 	by 	the 	supplier. 	T h e
suppliers 	were 	paid 	by 	the 	cooperatives, 	w h i c h 	in 	turn 	billed 	the
individual 	members, 	T h e 	diseounts 	received 	by 	the 	cooperatives
were 	based 	on 	all 	m e m b e r s 1 	aggregate 	purchases, 	and 	were
distributed 	to 	the membe.rs at 	the 	end 	o f 	the 	year 	in 	proportion
to 	their 	purchases 	through 	the 	cooperative.
In 	each 	case 	courts 	upheld 	the C 	ission" 	findings 	that
individual 	members 	rather 	thap 	the 	cooperatives 	w e r e 	the 	real
purchasers, 	that 	they 	received 	discounts 	not 	available 	to 	their
competitor$, 	and 	that 	the 	discounts 	caused 	competitive 	injury.
Because 	the members 	received 	larger 	diseounts 	on 	supplies
purchased 	in 	the 	same manner 	and 	m o u n t s 	as 	before 	they 	became
members 	of' 	the 	eooperatives, 	i t 	was 	held 	that 	they 	knew 	or 	should
have 	known 	that 	the 	discounts 	could 	not 	be 	legally 	justified.
Members 	of 	buying 	cooperatives 	were 	a l s o 	found 	to 	have
violated 	Section 	2(f) 	w h e n 	they 	received 	* f u n c t i o n a l w 	or
wholesale 	diseounts 	not 	available 	to 	their 	competitors, 	where 	the
effect 	of 	the 	discrimination 	was 	to 	injure 	competition, 	Alhambra
8 Motor 	Parts, 	6 8 	FeTeCe 	1038 	(1965); 	National 	Parts 	Warehouse, 	6 3
F.T.C, 	1692 	(1963), 	a f f l d 	sub. 	nom. 	G e n e r a l 	A u t o 	Supplies, 	Inc.
v. 	F X , 	346 	F.2d 	311'- 	Cir. 	19651, 	cert. 	dimissed, 	382 	U.S.
9 2 5 m 9 6 5 ) , In 	those 	cases, 	groups 	of 	a u t o m o t i v e 	parts 	jobbers
formed 	buying 	cooperatives 	to 	act 	as 	w a r e h o u s e 	distributors.
G o o d s 	were 	purchased 	b y 	the 	cooperatives 	in 	their 	own 	name 	and
) stored 	in 	their 	warehouses, 	and 	then 	shipped 	to 	jobber 	members 	as
orders 	were 	received. 	In 	some 	cases, 	g o o d s 	w e r e 	ordered 	through

dVT3 	v 	- 	a
w 	Q, 	r 	6 	r, 	d~ 	- 4 w w c o a 8
. & O M 	a, 	. O 	r: 	' 	3 c - 4 0 I r: 	e-4 	i?-,	
- 4 Q , 	L4 	G b C 	b o ~ t l - , 	.*-, 	o u a 	o U 	. Q)	
ad r: 	& @ . M e , 	V 	O 	D r u b 	3 	-0 	vr aE-. 	t 	.- 	Q, 	01- 	W C 	w s , 	- 	Q t +
h2lr. 	a, O C I 	S c - r W 0 " 	" " 2 : 	:u 	.-",a 0 0 	rn 	r : W @ ? 	6 , J = 	u 	- 4 C , Q x d r o
c u 	ffi 	..r, 	C 	MirtM 	o e 	C 	.-. 	* d o . = - W e d U 	4 . ~t2
Vt 	Q, 	a @ % 	y 	. M u .- 	p a p,+s 	I.,.- .-- & 	E 	- 	.-- 0	a-
.".crabCE 	Q J ~ 1 . + 2 1 U C I r d e v l $ W > Q
c m V 	4) 	m 0 a d r n 	+ = u Q O d V 	V C ( X I c 0 	b 	--.	
Q,- 	@ 	Q , * C 	M 	C 	O 	1 u & O d :,c V a l c--E4 3 3 3 w O L " Q
a 	8 , 	49 c 	S r 4 C W O r n 	QI c-,.....c. 	0 42.- 	E 	- a l + ) C W Q	@	n 9 3 	e - v v 3 . - ECQ-'rnQ,a,
C o b - I 	6 - 4 	* E 	c 	3 	g 	~	cb ol	O b a 	8 dl B'C .& 	.c.a o 	4 C aJ 	we. 	W f 3 . 4 f 0 	* 3	.P,3.- 	& 0 1 Q Z Y 	4 	~ 	w 	~ 	w 	- 	4	~ 	3 G 	+ 	W 	. 	- 	+ 	~ 	E 	~ 	~ 	~	~	8 c a 5.4	@ 4 Q , O U O O 	- a
P 	) 	U 	~ 	C 	S 	C 	* 	W 	~ 	~ 	r n " 0 	& 	O M 	3 	r J m V = Y @ @ C 	- 	td
e.-.p &.- 0 	W O c 	a a, ha&	C * W r a - c . 	- + W E 	%a,
. 	Q . - i - - c l E 	O c r 3 td'C. 3 0 4 v E d 	O	r c c r . 4 	O W 7 1 	@ & E n . . - (
.cr 	C c .- - 	% I U r d Q , W 	D .- 	..-. 	p 	. . - . ~ . = - o nt 	o
O E 	- 4 , O C W 	C C W C 	O O L ( 9 	..UC%4 	e r v , r , * O a O ~	' " 1 Q W G 0 o W a a . - 	.-a,ou;
'1 ha4 e , m 	.- (d O 	01 0 1 W M c " 	&"
- - t l r ~ a m w r *> 	JC n a -4 	@-., 	4.- 	o r 3 r c a o
3, 	4 	@ d V b V ) @ * , 	u 	c 	V 	0 	g Q , ~ E 4 3 r V . - 4 . J t : b M 	( L . @
- - w a r n 	% e , . - a u 	.r Vt += V) 	4 , r : u 	V ) c r a j o e 	W W . - a a c v
w o . 4 % L 4 . e 	- r w 	h 	d o a m 	@ m u 	" 4
0 >.e (9 b l c c " 	' O V 	at0 	h-4 - C O C 	b dl 	a 	3
W.-TI 	4.G V 	a d p : 	bar. 	r &-+ c w o.-..-- Q, O D a* ot-. 	E 0
& 	b o g " 	J = Q I E O & 	> - - 4 1 = 0 	O 	- - ( 3 0 5
.c.0 	r: 	%-4 	4.J 0 ) - 	1 	m 	Q * r V C I C O O b
W T 1 Q t V O l l S @ Q t 1 = O * 	onZ.-- rn E a 	u z o e u o O r 	txj . 0 - - - - 	t r h
b w r, €2	G C C @ v v 	3 @ U , 	k 3 	(r	
0 v o c.- g - 	uu @ * M U '	01 	--t 	c w m w 	, 	0 	..c a b J C 	-4
: m a z ; z u w % O 1 * 	-4 dl CbD* 	6, 	c---.u.uu .. 	b 	. 	~ 	LI 0.-
a 	o 	, 	~ ac 	& - ~ , a ) ~ . . - r , 	.P.u 	C 0 4 r n 3 w w Q , - 0 L.+: Q , @ Q ) . r r C
a : , % & e , ~ w , r w 	* 1
!&-.? 	0.- 	tU O) C E Q,C 	3 4 . ~a
. - . c . @ * . . * C g : 	C O 	V 	a 4 	E W Q , 	. - u 3 1 	,a 	W b . -
C ~ 3 : W 0 * r V w - 	w ( 9 	a J O C 	U V
0 1 W . - . ( O b 	( = > 	0 	- 0 , r
*.r --.-. a 3: 4
E d 	*..-.Q.-.D	mad 	r n . - O V ) 	t d c m	Q, a*-	cn	..	4, c	d .M	B b e e r n 	- C O 	m >
a u v 	n 8 w e - s e h 	1 	We@..-( 	O E 	. . - O G + C O 	w 	v 	~ 	m 	a 	~ 	~
.-. .d 	T 1 Q t O - 4 C > w a S L 3 0 . -
c C @ u b V v l r 	. - . : , J C W o 	V + '
y w u r n . c r 	0, 	-g".d"Jar, 	Q,
a rn rn c 0.- 	e m c 	--w
. c . w 3 v w o 	0 	+ r V W
& W & 0 	.- 	. Q , o l Q E ( r
o 	a v w & a O M . - . 	h~
dl b 	C
3 - 	W V , O 	tJ m b h - 4 (9
O O Q , 	01 	2E 	W W V ) L ~ , O Q E
e c vruu* U r : 	W . m U 	e 	0.c 	m o c T 1
0 E 	- b e v v l hu.--=;
Qtvuw 4 3 	* 4 	2- 	4 	~ 	- 	3 	0 	~ 	3 	~ 	~ 	1 	~ 	a 	d 	a 	o 	v 	t 	~ 	b
3 b-4 V) 0 	. - > Y
*
!	iO.m.G.4 dl ccn c a $ . - l r C - ( 	I ' "	0 I C
6, & F ~ ' Ba. 	a-4.-.c--t.-.-E U m-f!
V V a J 	a r . 	u
m - r n r m 	w
. M t l r n O d l
a o s l 	2lr.v
v 	a 	m 	aJ
U 	W b V
w c n v r n o 3
3 Q I c a d - 7 1
*..l.-. 	c	(dC
er 	v W . - 	r
W . ~ W G W 	e
Q , > W S t n W O
cn --s a c : s--
e r .4 	.C: a l e
V u d ) . - . ( v c a
a l v a t l . . 	c:
QI 	( 9 3 1 0 . -
. c v t c r ; w a @ E
gL4 - 	." 	.d
a 	a 	~ 	w 	w	~4
0 0 . - 7 1 	C
1 1 V 0 3 @
Q O c 0 0.-
OcJ.c.M-4-u
3 Q) v2.w 	d) V U Q Z . U C
- 	B R * w ( D m 	G C G
F c r.G c: d) w v u 3
n 	3 0 @ . C : h c 	n o
w 	o a 	u w g d 8 - v
s 	e u o 	r s a t r a a a w
S 	c 	r 	n 	r 	1 ~ 	.@	~
*r rs- 	a n a n z d
c: s P
a l w v 	a? 	4) 	dl
L L 	e * 4 > c 2 * *
e, 3 a?--*- 	Be-- 	0 al
a e c 4 	.(us* 	- 	6
o ~ a d n s d + , a l 	F I I - o
o c d a r , r , y r , 	. r , ~ . -

t 	m o s t 	products 	sold 	by 	the Co-op 	are 	not 	purchased 	f o r 	resale
ers, 	but 	are 	used 	in 	producing 	a 	service 	sold 	by 	the
es. 	In 	at 	least 	two 	cases 	i t 	has 	been 	held 	that 	no
m p o t i t i o n 	resulted 	f r o m 	price 	d i f f e r e n c e s on
sold 	t s m n u f a e t u r e r s 	f o r 	incorporation 	into 	another
product, 	beeause 	the 	price 	o f 	t
o f 	the 	cost 	of 	the 	finished 	pro
o n g 	the Co-op's 	s a b e r s 	would
also 	b e 	relevant,
I D 	should 	be 	noted 	that 	the C 	i s s i o n f s orders 	relating 	to
Punctiowal 	discounts 	granted 	t a 	c o 	satives 	have 	been 	the
subject 	of 	substantial 	criticism, 	and 	t h e 	C
reconsider 	the 	legality 	of 	s o m e 	types 	o f 	f u
p e n d i n g 	a-inistrative 	litig 	a e c m p a n y i ng
issuanee 	of 	the 	complaint 	in 	., F T G Docket
No, 	9 1 3 3 	(complaint 	issued 	Ap
Chat 	"evidence 	concerning 	services 	and 	functions 	performed 	by
respondent 	[buyer] 	on 	goods 	I t 	purchases 	for 	resale 	at 	the 	retail
leveln 	was 	to 	be 	admissible 	at 	trial, 	so 	that 	i t 	could 	decide
iminatory 	discounts 	could 	be 	justified 	by
1- services 	_performed b vd - the-fevored	- -	-- 	. . 	buyer 	that 	are
b y 	compe t i ng 	buyers. 	Comoar e ' . t l ~ i l - f e - ~ - % o . , b 1 J - -
06-%bra-f*-&-323-F.ld 	4 	4 	c 	i 	r 	. 	19631,
, 	377 	U.S. 	9 2 3 	( 1 9 6 4 ) , 	-	with 	Doubleday 	& C o - , 52
1955). 	W e 	cannot, 	however, 	predict 	the 	outcome 	of
the 	litigation.
Under 	most 	circumstances, 	eooperative 	buying 	associations
perform 	a 	legitimate 	and 	procompetitive 	function. 	In 	limited
unusual 	c i r c m s t a n c e s , -however, the 	activities 	of 	sueh
organizations 	may 	raise 	issues 	under 	Section 	5 	of 	the 	Federal
T r a d e 	C o m i s s i o n 	Act. 	T h r e e 	sueh 	circumstances 	will 	be 	noted.
First, 	eooperative 	assoeiations 	normally 	are 	free 	to 	limi
their 	membership. 	However, 	antitrust 	issues 	are 	raised 	when
businessmen 	jointly 	exclude 	their 	competitors 	from membership
an- - 	oraanization 	which 	c o n f e r s 	on 	its members 	a 	significant
compeiitive 	advantage 	that 	is 	not 	reasonably 	obtain able
elsewhe re. 	S e e 	SilGer 	v . 	New Y o r k 	S t o c k 	Exchange, 	3 7 3 	U . S . 	31
-(1963); 	Associated 	Press 	v. 	U n i t e d 	States, 	326 	U.S. 	1 	(1945);
States 	v. 	Terminal 	R a i l r o a d 	Ass'n, 	224.U.S. 	383 	(1912).
d 	be 	concerned 	i f 	the 	Co-op 	unreasonably 	exclluded 	some
ng 	nursing 	homes, 	and 	i f 	exclusion 	severely 	handicapped
nstitutions' 	ability 	to 	compete. 	According 	to 	your
membership 	in 	the 	Co-op 	would 	be 	available 	only 	to

*embers 	of 	the Association. 	I t 	is 	not 	clear 	whether 	any 	nursing
e s 	that 	Compete 	in 	a 	significant 	way 	with Assoeiation members
uld 	in 	fact 	be 	excluded. 	Nor 	do we 	have 	enough 	information 	to
determine whether membership 	in 	the Co-op 	would 	be 	of 	sufficient
competitive 	benefit 	to 	any 	excluded 	nursing 	h m e s 	to 	raise
antitrust 	issues. 	This 	determination 	would 	depend 	p r i m r i l y 	on
the m g n i t u d e 	of 	the 	discounts 	available 	to Co-op 	members, 	the
p m p o r t i o n 	of 	nursing 	homesQeosts 	accounted 	for 	by 	goods
available 	through 	the Co-op, 	tho 	significance of 	the 	cost 	savlngs
to nursing 	homes' 	ability 	to 	compete .effectively, and 	the
availability 	of 	similar 	purchasing 	ar'rangements 	ta 	any 	excluded
etitors 	of 	Co-op 	m
Second, 	a 	eo0perativ.e buying 	arrangement 	raises 	antitrust
eoneerns 	if 	i t 	represents..& sufficient 	proportion 	of 	buyers 	in 	sl
nasarket 	so 	that 	el l e f s -&re 	unreesonablq 	degr ived 	0.f. e m p e l i l i o n
other
e 	joint 	purehasing 	ageneies 	are 	formed
by 	buyers 	who 	do 	not 	possess 	any 	significant 	degree 	of 	market
power, 	no 	antitrust 	concerns 	are 	likely 	to 	be 	present. 	While 	i t
seems 	unlikely 	that 	the Co-op 	would 	possess 	significant 	market
Dower, 	w e 	do 	not 	have 	enough 	information 	to make 	&*definitive 	:
'udgmen t 	on 	that 	quest ion.-
Finally, 	of 	course, 	serious 	antitrust 	issues 	would 	be 	raissd
8'	i f 	the Co-op 	were 	to 	become 	a 	forum 	for 	anticompetitive
agreements 	-&ong 	its members. 	However, w e 	do 	not 	assume 	that 	the
Co-op 	will 	be 	used 	far 	this 	purpose.
Conclusion . 	.
T h e 	antit-rust laws 	do 	n6-t prohibit 	the 	establishment 	of 	a
cooperative buying 	assaciation 	such 	as 	that 	proposed 	by 	Medi
Co-op. 	However, 	as 	w e 	have. discussed 	in 	this 	letter, 	the C o - o p ' s
activities, 	or 	its 	exercise 	o f 	significant market 	power, could 	in
some 	circumstances 	violate 	laws 	administered 	b y 	the C o m i s s i o n .
W e 	lack 	information 	sufficient 	to 	allow 	us 	fully 	to 	evaluate
these 	issues. 	Nonetheless, 	we 	hope.that 	this 	discussion w i l l
assist 	you 	in 	assessing 	Medi 	Co-op's 	proposal.
Sincerely,
Thomas 	J. 	Campbell
Director
Bureau 	of 	Competition