New appointments in both the FTC and DOJ signal greater enforcement action on the horizon—with buyout firms a particular target
In January, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) announced a joint public inquiry to update the agencies' merger guidelines, which set out the framework by which the agencies assess the potential competitive effect of a merger. In their request for public comment, the agencies indicated particular interest in topics not previously covered by the guidelines, including threats to nascent competitors, the unique characteristics of digital markets, and effects on labor markets.
Both agencies' current leadership question the current consumer welfare standard, which they believe did not go far enough to address competition issues in the US market.
The analysis of the merger guidelines is part of the Biden administration's more aggressive attitude toward antitrust, as exemplified through actions and words of recent leadership appointments. Jonathan Kanter was appointed head of the DOJ's antitrust division last November, and takes a more expansive view on antitrust enforcement than many of his predecessors. Both Kanter and FTC Chair Lina Khan, have been vocal critics of Big Tech, in particular.
Clampdown on PE
One area that has already received attention has been platform, or “roll-up” transactions, which involve buying and consolidating multiple smaller firms in the same industry.
Ahead of the update to the merger guidelines, the FTC and DOJ have also publicly stated on multiple occasions their intent to scrutinize private equity more closely. One area that has already received attention has been platform, or "roll-up" transactions, which involve buying and consolidating multiple smaller firms in the same industry. Also called buy-and-build, this strategy has grown in popularity in recent years.
In June, the FTC announced a consent order against JAB Consumer Partners requiring the PE firm to divest 16 veterinary clinics as part of its acquisition of SAGE Veterinary Partners. JAB had previously bought Compassion-First Pet Hospital and National Veterinary Associates both in 2019 and subsequently acquired a string of more than ten smaller veterinary businesses around the US.
Breaking the deadlock
After a long delay, in May the Senate confirmed Alvaro Bedoya as an FTC commissioner, filling a role that had been left unfilled since October 2021. Until the confirmation, the commission had been stuck in a deadlock of two Democratic and two Republican commissioners. Privacy expert Bedoya's appointment will mean that the FTC will be more empowered to pursue the progressive enforcement and policy agenda favored by Chair Khan.
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