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DaVita Inc.’s $3.05 billion acquisition of Gambro Healthcare US is expected to encounter antitrust trouble in the U.S., though it appears the companies should be able to secure clearance to close the deal. “This is a merger that will get considerable attention,” said David Balto, a partner at Robins, Kaplan, Miller & Ciresi in Washington. The government, through the Medicare program, pays the treatment costs for many dialysis patients. Given the size of the expense, antitrust enforcers will be especially thorough in their review, Balto said. The merger, formally unveiled Tuesday would make DaVita the biggest dialysis provider in the U.S., with about 1,200 clinics. German giant Fresenius Medical Care AG has 1,110 U.S. clinics. Third is Renal Care Group Inc., with roughly 370. Antitrust experts said the Department of Justice, which is expected to conduct the review, must first determine if there is a national market for dialysis treatment. Such a market could exist if enough insurers testify that they pit DaVita against Gambro to get price cuts. “If enough insurers need national providers, then there could be a national market,” Balto said. Assuming there is not a national market, enforcers will look at very narrow geographic markets because patients who need dialysis cannot travel far for an alternative clinic. That suggests the investigation could take several months at minimum to complete. Enforcers will need to check not just which of the national chains have clinics near the Gambro facilities, but also must identify the many hospitals and smaller organizations that offer dialysis treatment. Until such a review is complete, it is impossible to know whether DaVita will have to divest many clinics to satisfy the Justice Department. But experts said at least some divestitures are likely, given the size of the two operations. Copyright �2004 TDD, LLC. All rights reserved.

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