You may have seen that the FTC sued Welsh Carson and its portfolio company, U.S. Anesthesia Partners (USAP), in the Southern District of Texas, alleging various antitrust violations. This is the first enforcement action coming out of the FTC’s initiative to retroactively investigate private equity “roll up” strategies that was announced shortly after Chair Lina Khan’s appointment in June 2021. In a memo to FTC staff dated September 22, 2021, Chair Khan wrote: “The growing role of private equity and other investment vehicles invites us to examine how these business models may distort ordinary incentives in ways that strip productive capacity and may facilitate unfair methods of competition and consumer protection violations.”
The FTC alleges that Welsh Carson and USAP undertook a series of acquisitions that, taken as a whole, gave USAP a high market share and monopoly power in the markets for certain anesthesia services in Houston, Dallas, and Austin. In addition, the FTC alleges that USAP entered into price-setting and market allocation agreements with competitors.