Antitrust Focus on Private Equity Funds and Serial Acquisitions

The Federal Trade Commission (FTC) has recently taken a more aggressive stance against private equity buyers, particularly focusing on their role in serial acquisitions. This shift in approach began during the Trump administration and has intensified under the Biden administration. The FTC has raised concerns about the potential for private equity to reduce competition and has targeted specific private equity firms for their acquisition strategies.

One notable case involves JAB Consumer Partners, where the FTC required divestiture remedies in two acquisitions of veterinary clinics. The FTC alleged that private equity firms engage in roll-up strategies that allow them to accrue market power off the Commission’s radar. This case marked the first explicit challenge targeting a private equity buyer.

Another significant case involved Welsh Carson and U.S. Anesthesia Partners, where the FTC filed a complaint accusing the companies of engaging in a decade-long anti-competitive scheme to consolidate anesthesiology services in Texas. The FTC alleged violations of various antitrust laws and sought a permanent injunction to prevent future anti-competitive activities.

The FTC’s actions against private equity buyers have raised questions about the rationale behind targeting private equity ownership in competitive concerns. Despite setbacks in some cases, the FTC and DOJ are expected to continue their focus on private equity and serial acquisitions. The newly expanded HSR form and revised Merger Guidelines will provide the agencies with more tools to identify and investigate potential anti-competitive behavior.

Overall, the future of FTC enforcement against private equity-backed acquisitions remains uncertain, but the agencies’ continued focus on private equity involvement suggests that regulatory scrutiny will persist in this area.