A Texas federal judge has dismissed the FTC’s high-profile suit against private equity firm Welsh Carson, but allowed the case to proceed against Welsh Carson’s portfolio company, U.S. Anesthesia Partners (USAP). 

You may recall that the FTC filed a complaint last September challenging allegedly anticompetitive conduct by USAP, as well as Welsh Carson [prior WorthWeil Antitrust Alert]. The FTC alleged that Welsh Carson was the “mastermind” behind the anticompetitive “roll-up” strategy at issue in the complaint and therefore liable for antitrust violations along with USAP.

The court disagreed with the FTC and granted Welsh Carson’s motion to dismiss because:

  • Welsh Carson has held a minority position (23%) in USAP since 2017 and only had rights to appoint two of fourteen directors to the USAP board;
  • The FTC “does not allege any conduct by Welsh Carson in the past six years that is a plausible antitrust violation;” and
  • As a result, the FTC cannot enjoin Welsh Carson because Welsh Carson is not “violating” antitrust laws, “nor is it about to,” as required by the forward-looking language of the FTC Act provision relied upon by the FTC in seeking injunctions (15 U.S.C. § 53(b) (commonly referred to as “Section 13(b)”). 

Importantly, the court allowed the FTC’s litigation to proceed against USAP.  Noting that USAP had acquired at least 15 anesthesia groups over the last 12 years and continues to hold those companies post-acquisition, this is enough to satisfy 13(b)’s requirement that “ongoing” conduct be alleged to violate the antitrust laws. In a key footnote, the court explains the divergent outcome:

It is worth distinguishing USAP’s conduct from Welsh Carson’s. Welsh Carson owned a noncontrolling piece of a company that acquired another company; the acquisitions at issue here were thus derivative of a company in which one Welsh Carson entity owned 23% and had disproportionally few board seats. That is very different from the direct, wholesale acquisition of one company by its competitor.


Private equity firms are still in the FTC’s crosshairs. Despite the favorable ruling, the court is careful to caution that its analysis “should not be construed to offer any opinion on Welsh Carson’s conduct except as Section 13(b) applies to it.” The court itself suggests that Section 5(b) of the FTC Act may be a more appropriate statute to apply to allegedly anticompetitive past conduct, like completed acquisitions. Moreover, the court’s analysis relies heavily on the fact that Welsh Carson had reduced its holding to a minority, non-controlling stake in the years since the alleged conduct began. While the decision may limit 13(b) liability for the anticompetitive conduct of portfolio companies in which PE firms have minority investments, it is unlikely to deter the FTC from using Section 5 and/or bringing cases against PE firms with higher ownership interests or other alleged involvement in the underlying anticompetitive conduct.   

We will provide further updates as this case develops, including any appeals by the FTC of the court’s dismissal.