Antitrust Agencies Reaffirm Their Commitment to Rooting Out "Roll-Up" Strategies
The antitrust agencies' focus on "serial acquisitions" or "roll-ups" shows no signs of abating. After numerous public comments from agency leaders concerning the cumulative impact on competition of a series of previously unreported and undetected transactions (with specific attention paid to the involvement of private equity companies), the adoption of new merger guidelines that call out serial acquisitions for the first time, and the initiation by the Federal Trade Commission (FTC) of its first challenge to participants in an alleged roll-up strategy, the FTC announced, during its open commission meeting on May 23, 2024, the publication of a joint FTC/U.S. Department of Justice (DOJ) formal request for information on serial acquisitions across all sectors of the economy. The announcement follows a previous request for information by the FTC, DOJ and U.S. Department of Health and Human Services (HHS) concerning transactions in the healthcare industry. FTC officials at an open meeting explained that the agencies sought to learn through the most recent information request why businesses pursue roll-up strategies, how companies making frequent acquisitions have gone undetected and how such acquisition practices affect prices, product quality, wages and working conditions for workers.
As extensively reported by Holland & Knight's Antitrust Team, serial acquisitions –especially by private equity companies in the healthcare industry – have been a particular focus of the Biden Administration's antitrust authorities who have repeatedly called out private equity companies for engaging in roll-up strategies. Their new merger guidelines, released in December 2023, state explicitly (in Guideline 8) that a firm might violate the antitrust laws if it "engages in an anticompetitive pattern or strategy of multiple acquisitions in the same or related business lines." And in September 2023, the FTC sued a private equity company and one of its former portfolio companies for a series of acquisitions of Texas-based anesthesiology practices. The private equity company escaped the lawsuit on a motion to dismiss, but litigation against the anesthesiology practice acquirer continues, and other private equity companies face an ongoing threat of further litigation.
The FTC and DOJ's recent request for information and announcements underscore the agencies' intention to utilize all tools at their disposal – including solicitation of public input and reporting – to track non-reportable transactions and thwart roll-up schemes. These recent developments should serve as the latest warnings to firms of all industries that even small transactions are now potential targets of antitrust scrutiny, particularly when they follow prior acquisitions in the same industry or market.