Update: The FTC has won a preliminary injunction to stop IQVIA from acquiring Propel Media. The judge (Judge Ramos in the Southern District of New York) ruled the injunction is in the public’s interest and the FTC has shown a reasonable probability of a substantial impairment in competition should the deal proceed. A written opinion is not available as of this post (January 3, 2024).
The Federal Trade Commission has sued to block IQVIA’s proposed acquisition of Propel Media—a deal the FTC says would combine two of the top three providers of programmatic advertising that target U.S. healthcare providers on a one-to-one basis. The FTC says IQVIA and Propel both operate demand-side platforms or “DSPs” (called Lasso and DeepIntent, respectively) in an already-concentrated “healthcare provider programmatic advertising market” (a “subset of the total healthcare digital advertising industry”). And the FTC argues the deal would result in further concentration in that market and would significantly decrease advertising competition, which would contribute to higher prescription drug costs for U.S. consumers.
The FTC has filed an administrative complaint and has asked the Southern District of New York to block the acquisition until the administrative trial is completed—projected for December 2023. The FTC requested that the injunction issue in the next few days on or before July 21.
According to the FTC, programmatic advertising matches buyers and sellers of advertising space in virtual auctions that occur in seconds or less. Programmatic advertising automates the more traditional negotiations between advertiser and publisher of print or digital ads. DSPs like Lasso and DeepIntent provide programmatic advertising to healthcare advertisers specifically (i.e., pharmaceutical companies and their advertising agencies).
According to the FTC, IQVIA and Propel are the leading DSPs providing programmatic advertising that targets healthcare providers on a one-to-one basis. This means IQVIA and Propel have the scope and quality of healthcare data to identify individual doctors—and their digital devices—who are relevant to a particular ad campaign. DSPs target healthcare providers because they make the “prescribing decisions” and shape consumers’ perceptions of drugs and drug brands.
Although the FTC admits that there are many “generalist” programmatic advertisers, the FTC urges that healthcare DSPs operate in a distinct relevant market specific to healthcare advertising with clients who have unique advertising demands.
The FTC calls the proposed acquisition presumptively unlawful under the Horizontal Merger Guidelines and caselaw. The FTC’s major concerns are twofold: the combination would eliminate “head-to-head” competition between 2 of only 3 competitors in the relevant market and would enhance IQVIA’s ability to reduce or eliminate potential competition by refusing to sell its healthcare data to would-be competitors or by selling it at anticompetitive prices. The FTC charges that IQVIA is the world leader in terms of the scale and quality of its healthcare data. And while IQVIA currently sells that data to DSPs and others, the FTC says IQVIA would be positioned to increase price and/or reduce access to data critical to one-to-one healthcare DSPs should the deal go through.
While this challenge by the FTC came the same week that it and the DOJ Antitrust Division issued new draft Merger Guidelines hostile to all mergers, most of the issues raised by this challenge seem similar to those raised under the old Horizontal Merger Guidelines. As IQVIA hinted in a public response to the case, the parties will dispute the narrow market definition and portray the merger as one that will help it “increase competition with the industry giants.” If the parties continue to fight this FTC challenge, expect this case to come down to which side can convince a judge of the accuracy of its vision of current and future competition. And with the new Guidelines—which are not binding on courts—expect even more challenges to mergers of all types.