On Thursday, May 23, 2024, antitrust enforcers at the Federal Trade Commission (FTC) and Department of Justice (DOJ) jointly announced a Request for Information (RFI) focused on “serial acquisitions and roll-up strategies” that may have impacted competition in any area of the U.S. economy. The request seeks public comment on companies that make frequent acquisitions, the incentives for pursuing these strategies, and the resulting effects on consumers and workers. Private equity firms are specifically called-out in the RFI.

The announcement follows an earlier public inquiry launched by the FTC, DOJ, and the Department of Health & Human Services (HHS) in March focused on PE roll-ups in the healthcare space, as discussed in our previous post on antitrust scrutiny of healthcare deals. The latest request applies broadly to all industries and does not explicitly single out any individual sector for scrutiny.

The RFI seeks public comment on several agency observations of serial acquisition conduct and market characteristics. The effects that the public may comment on include:

  • Effects on pricing, variety, and quality of products and services.
  • Effects on overall market landscape and changes in the number of competitors in an industry over time.
  • Effects on workers, including compensation, benefits, conditions, employment stability, outsourcing, and mobility within an industry.
  • Effects on suppliers, contract terms, and other market dynamics impacting customers.

The inquiry also seeks to gather information on certain commercial strategies by serial acquirers that the agencies believe may have an exclusionary competitive impact. Specifically, the RFI asks for information regarding whether companies engaging in roll-ups subsequently may have: priced products below cost to push competitors out of the market, excluded rivals from the market by refusing to deal with rivals or via tying arrangements, leveraged scale in one market to gain a competitive advantage in another, or used litigation or the threat of litigation to incentivize merger activity.

What’s motivating this?

The public RFI continues this Administration’s push for a broader and more aggressive policy of antitrust enforcement against private equity firms and other so-called serial acquirers. For example, in November 2022, the FTC released a policy statement interpreting Section 5 of the FTC Act as having a broader application than the federal antitrust laws. The policy statement identified many of the same issues highlighted in this RFI, including concerns relating to “roll-up acquisitions.”

At last Thursday’s Open Commission Meeting, FTC staff presented on what they perceive as the difficulties of detecting, let alone investigating, smaller deals that fall below the HSR Act filing thresholds. To identify these transactions the antitrust agencies have primarily relied on public press releases, investigative journalism, and customer or worker complaints. The RFI is structured to enable members of the public to assist in identifying examples of serial acquisitions and comment on any changing competitive strategies and consequences. The inquiry states that the responses will be used to “inform the Agencies’ enforcement priorities and future actions.” Additionally, Chair Khan remarked at the Meeting that the RFI was aligned with the agency’s goal of addressing market consolidation in its incipiency.

Practical impact & risks to business

Serial acquisition and private equity firm roll-up strategies have been an area of significant antitrust focus for the last several years. Although the current RFI may expand this scrutiny, businesses should avoid overreacting to this announcement. Instead, we recommend careful planning with antitrust counsel to identify potential areas of risk relating to proposed acquisitions and contemplated (or ongoing) business practices. This remains the best way to ensure that your business mitigates risk appropriately without being overly conservative and foregoing legitimate and legal M&A activities or commercial practices that can generate real value.   

The RFI will remain open for public comment until July 22, 2024.