FTC Seeks to Block Health Care Digital Advertising Merger | Practical Law

FTC Seeks to Block Health Care Digital Advertising Merger | Practical Law

On July 17, 2023, the Federal Trade Commission (FTC) filed suit to block IQVIA's acquisition of Propel Media, which owns health care advertising company and demand-side platform (DSP) DeepIntent. IQVIA owns competing DSP Lasso. The FTC alleged that the merger would eliminate head-to-head competition between Lasso and DeepIntent, and would also provide IQVIA, which maintains robust health care industry data, with the ability and incentive to restrict or foreclose access to key data inputs for DSP rivals.

FTC Seeks to Block Health Care Digital Advertising Merger

Practical Law Legal Update w-040-1946 (Approx. 5 pages)

FTC Seeks to Block Health Care Digital Advertising Merger

by Practical Law Antitrust
Law stated as of 27 Jul 2023USA (National/Federal)
On July 17, 2023, the Federal Trade Commission (FTC) filed suit to block IQVIA's acquisition of Propel Media, which owns health care advertising company and demand-side platform (DSP) DeepIntent. IQVIA owns competing DSP Lasso. The FTC alleged that the merger would eliminate head-to-head competition between Lasso and DeepIntent, and would also provide IQVIA, which maintains robust health care industry data, with the ability and incentive to restrict or foreclose access to key data inputs for DSP rivals.
On July 17, 2023, the Federal Trade Commission (FTC) filed an administrative complaint to block IQVIA Holdings Inc.'s acquisition of Propel Media, Inc. IQVIA is the world's largest health care data provider, and owns Lasso Marketing. Lasso is one of the top three providers of programmatic advertising, known as a demand-side platform (DSP). DSPs carry out targeted advertising to health care professionals (HCPs), in particular developing targeted advertising campaigns for prescription drugs. Propel's DeepIntent DSP competes head-to-head with Lasso, and the acquisition would combine two of the top three health care DSPs.
According to the complaint, the merger violates Section 7 of the Clayton Act and Section 5 of the FTC Act. The FTC alleged that the merger would harm competition both horizontally and vertically. According to the FTC, the merger would:
  • Remove head-to-head competition between Lasso and DeepIntent, driving up prices and reducing product quality and choice.
  • Provide IQVIA with the ability and incentive to leverage its control of key datasets to foreclose or disadvantage current or future DeepIntent or Lasso rivals by raising prices, reducing data quality, or restricting advertisers from using its data.
The FTC voted 3-0 both to file the administrative complaint and to authorize FTC staff to file for a temporary restraining order and preliminary injunction in federal district court to prohibit the merger from closing pending the outcome of the administrative hearing.

Industry Background

Health care companies like pharmaceutical manufacturers, biotechnology companies, and their advertising agencies inform potential customers, and in particular HCPs, about their products through digital advertising. These health care advertisers use DSPs to plan, activate, measure, and optimize their programmatic advertising campaigns targeting HCPs across media platforms. The DSPs set up automated purchasing and placement of ads on highly targeted media platforms.
DSPs facilitate the buying of digital advertising space and offer a full complement of services for advertising campaigns, start to finish. The process involves identifying the target audience, selecting the devices and websites on which to advertise to reach the target audience, and measuring the effect of the campaign, including any increase in prescription volume as a result. There may also be changes throughout the campaign to optimize outcomes.
Three health care DSPs dominate the HCP programmatic advertising market, including DeepIntent, Lasso, and a third company whose name was redacted from the public complaint. There are a number of generalist DSPs, but health care DSPs exclusively serve the healthcare vertical. Health care DSPs have unique characteristics and capabilities that health care advertising clients demand.
IQVIA is a global leader in collecting and licensing data to health care and life sciences industries. Prior to its acquisition of Lasso, IQVIA did not have in-house programmatic advertising capability. It purchased Lasso in 2022, and Lasso and DeepIntent compete vigorously today on price and non-price metrics, such as innovation.
In addition, IQVIA controls the data that are key inputs for HCP programmatic advertising for all health care DSPs. According to the FTC there are few, if any, comparable alternatives to IQVIA's identity and prescribing data. The merger would allow IQVIA to harm competition by restricting or withholding access to this data.
According to the complaint, the industry is undergoing significant consolidation. In particular, IQVIA itself has been acquiring other medical data companies. The FTC alleges that these acquisitions, in addition to the DeepIntent merger, would further cement IQVIA's dominant position and allow the firm to wield significant market power.

Relevant Market

According to the complaint, HCP programmatic advertising is the relevant market. HCPs are an important audience because they not only write prescriptions, they also shape customer brand perception. In addition, health care DSPs build audiences that focus on US HCPs because those are the individuals that can prescribe FDA-approved drugs to US customers. Advertising campaigns targeted to non-US HCPs require different data and involve different regulatory frameworks, so are not a substitute for US HCP programmatic advertising.
While the campaigns target US HCPs, the FTC alleged a worldwide geographic market because, according to the complaint, HCP programmatic advertising suppliers and their customers can be located anywhere.
In addition, according to the FTC, HCP programmatic advertising provided by health care DSPs has certain unique characteristics and serves specific customer needs, including that it:
  • Leverages specialized datasets that contain information about HCPs, including HCP identity and prescribing data.
  • Is capable of 1:1 HCP targeting, meaning targeting of specific HCPs, rather than category-based targeting (for example, by targeting only those cardiologists that an advertiser thinks might be responsive to an advertising campaign, versus all cardiologists in a certain metropolitan area).
  • Can measure the effectiveness of healthcare campaigns based on prescription data, such as through an increase of prescriptions filled (known as script lift).
  • Increases access to advertising on medical-related sites (endemic sites), such as WebMD, though relationships with these types of sites.
  • Has distinct (increased) pricing from direct to consumer programmatic advertising and general advertising.
  • Is performed by specialized vendors: health care DSPs.
  • Serves a distinct set of customers: health care and pharmaceutical advertisers.
As alleged in the complaint, these characteristics make HCP programmatic advertising not readily interchangeable with other advertising, including direct to consumer programmatic and general advertising. Customer substitution to other advertising is not likely to be sufficient to defeat a small but significant and non-transitory increase in price by a hypothetical monopolist supplier of HCP programmatic advertising.

Alleged Competitive Impact

The FTC's complaint alleges that both the horizontal and vertical aspects of the transaction raise antitrust concerns because the merger would:
  • Eliminate horizontal head-to-head competition.
  • Provide the ability and incentive for the vertically integrated firm to foreclose rivals and raise entry barriers.

Elimination of Head-to-Head Competition

According to the complaint, the HCP programmatic advertising market is highly concentrated and dominated by three firms, including DeepIntent and Lasso. The merger would reduce the number of competitors from three to two. In addition, the FTC alleged that the proposed transaction was presumed unlawful under the Horizontal Merger Guidelines and controlling caselaw based on the overall post-merger market concentration, measured by the Herfindahl-Hirschman Index (HHI), and the post-merger increase in HHI.
According to the FTC, the merger would eliminate vigorous head-to-head competition between the parties in the HCP programmatic advertising market, which may result in higher prices and decreased quality and innovation.
The complaint also alleges that the parties act as a competitive restraint on each other. This competition benefited customers by helping them obtain lower prices, as well as obtain more desirable non-price terms, better service, and an increase in innovation.

Ability and Incentive to Foreclose Rivals

In addition to the allegedly problematic horizontal effects of the merger, the FTC also alleges that vertical aspects of the merger raise competitive concerns. The FTC's complaint alleged that the combined firm will have the ability and incentive to disadvantage rivals from using IQVIA's data in the HCP programmatic advertising market. Post-acquisition, IQVIA, as the leading upstream data provider, would have the ability to control key data inputs into HCP programmatic advertising, which could:
  • Weaken or disadvantage its actual or potential rivals.
  • Raise the existing and significant barriers to entry for potential rivals.
According to the complaint, IQVIA's breadth and depth of two key datasets is unmatched:
  • Identity data, and in particular, highly desirable consented to or opted-in data, which DSPs and advertisers prefer to reduce privacy and compliance concerns.
  • Prescribing data, which is key for building an advertising campaign's audience and measuring outcomes in terms of increased script lift.
Nearly all health care DSPs rely on IQVIA data in some capacity. IQVIA could use its ownership of both data inputs to disadvantage DeepIntent and Lasso's rivals by:
  • Raising the price of data access.
  • Refusing to provide third-party DSPs access to data.
  • Offering more limited or degraded data to third-party DSPs.
  • Limiting advertising customers from using DSPs other than DeepIntent or Lasso.
  • Accessing proprietary information about rival DSPs' technology and performance and using that information to inform their own innovations or to poach customers.
According to the complaint, the merger would also increase the inventive for IQVIA to disadvantage DeepIntent and Lasso's rivals because IQVIA would benefit significantly if rivals lose sales or change their behavior in response. This benefit would, according to the FTC, outweigh the lost profits from decreased data sales to rivals.
In addition, the FTC highlighted other impacts of the vertical elements of the merger on competition, alleging that:
  • The likelihood and degree of potential foreclosure is significant.
  • The nature and economic purpose of the merger is to consolidate Lasso, DeepIntent, and IQVIA into a single, integrated platform.
  • There is a significant industry trend toward consolidation, and IQVIA in particular has made a deliberate effort to consolidate, evidenced by its previous three acquisitions of firms in the industry. DeepIntent is the only significant unintegrated health care DSP left in the market. New entrants may not be able to compete unless they can enter at both the DSP and data supply levels simultaneously.
  • The combined firm's market power would be significant at both the data supply level and at the downstream advertising market.
  • Entry barriers, already high, would be increased by the vertical aspects of the merger as well, such as by restricting new entrants' access to IQVIA's key data inputs.

No Countervailing Factors

According to the complaint, new entry or expansion is unlikely to offset the anticompetitive effects of the merger, in large part because of IQVIA's ability to restrict access to key data inputs, which would severely disadvantage any potential Lasso or DeepIntent rival trying to enter the market. In addition, generalist DSPs would have to invest significant time and money to have the capabilities necessary to compete in the health care specialty market, for example, to establish relationships with endemic publishers.
In addition, the FTC argues that if a competitor entered to challenge IQVIA, it would not likely be a credible alternative to IQVIA's HCP prescribing data because:
  • The data is extensive and detailed.
  • Many customers already use IQVIA data and prefer to use the same data provider for HCP programmatic advertising as for other sales and marketing activities for data consistency.
According to the FTC, the merging parties could not point to verifiable, merger-specific efficiencies sufficient to rebut the presumption and evidence that the merger would substantially lessen competition in the relevant market.
For more on antitrust issues in health care markets, see Practice Notes, Antitrust Analysis of Vertical Health Care Mergers. For more on vertical mergers in general, see Practice Note, Vertical Mergers and Vertical Merger Enforcement Actions Chart.