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Less than two months after the Federal Trade Commission (FTC) filed a monopolization claim against US Anesthesia Partners (USAP), a private equity-backed healthcare business, FTC Chair Lina Khan is signaling that the agency may be broadening its focus to scrutinize private equity (PE) roll-ups across various industries. The lawsuit against USAP, backed by Welsh Carson Anderson & Stowe, marked the FTC’s first action against roll-up strategies in decades, challenging a foundational approach of the private equity sector.
Diversifying Targets
In a recent Odd Lots podcast, Khan stated that the FTC is exploring potential anti-competitive behavior in healthcare and other sectors. Market participants from various industries have contacted the FTC, suggesting areas warrant scrutiny. This move signifies a shift from solely focusing on prices to a more comprehensive evaluation of business structures.
“Hipster Antitrust” and Labor Market Focus
Since taking office in 2021, Khan has been criticized for pursuing a broader definition of antitrust, often called “hipster antitrust.” She emphasizes that the agency’s scrutiny extends beyond prices, highlighting concerns about using dominant market positions to exploit workers. Labor market concentration is now a key consideration in the FTC’s merger guidelines, reflecting the agency’s commitment to addressing competition concerns in employment markets.
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Serial Acquisitions in the Spotlight
Khan’s approach to the USAP-Welsh Carson case involves examining serial acquisitions collectively rather than in isolation. She argues that assessing the cumulative impact of multiple transactions is essential, even if individual acquisitions seem benign. The FTC’s stance serves as a warning to market participants that the agency will closely examine deals in their aggregate form.
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Flexible Antitrust Principles
While Khan rejects the notion that the USAP-Welsh Carson case signifies a return to traditional antitrust enforcement, she emphasizes the flexibility of the legal system in interpreting anticompetitive behavior. The open-ended approach allows enforcers to adapt to evolving markets, technologies, and business models, upholding antitrust principles across diverse industries.
Shifting Landscape for M&A
Khan believes that the FTC’s recent actions have influenced the landscape of mergers and acquisitions in the United States. Historically not a primary discussion point in deal negotiations, Antitrust risk is now a topic addressed from the outset, indicating a heightened awareness of potential regulatory challenges.
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