FTC and Department of Justice launch investigation into the impact of serial takeovers on competition

WASHINGTON — The Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DOJ) have launched a public investigation to examine how serial takeovers and roll-up strategies affect competition in various sectors of the economy.

The agencies issued a request for information to gather public input on corporate consolidation strategies. These strategies often involve a company expanding its dominance by purchasing several smaller companies in the same or related industries. This practice can lead to significant market scrutiny without triggering federal antitrust oversight because many of these transactions go unreported.

Corporate entities, including private equity firms, often make such acquisitions in various markets. This uncontrolled consolidation could harm competition, leading to higher prices, lower quality and stifling innovation, with impacts on consumers, workers and entire industries.

“Companies can use serial takeovers to expand markets, consolidate power and undermine fair competition, all while raising prices and compromising quality,” said FTC Chairwoman Lina M. Khan. “As the FTC examines these stealth consolidation plans, we encourage the public to submit information about where serial takeovers have occurred and their impacts.”

Deputy Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division emphasized the negative effects of these practices. “When companies use serial takeovers and other roll-up strategies to consolidate industries while avoiding antitrust scrutiny, they deprive Americans of the benefits of competition,” he said. “Public insight into where these takeovers occurred and their impact on competition will help us identify and prosecute harmful behavior.”

RFI is seeking information on serial acquisitions across all U.S. sectors, including housing, defense, cybersecurity, distribution, agriculture, construction and professional services. Public comments will be used to determine the agency’s enforcement priorities and future actions.

Studying the impact of corporate consolidation

This investigation comes at a crucial time when the role of private equity and corporate consolidation is under intense scrutiny. The focus on serial acquisitions reflects growing concerns that unchecked consolidation could harm the economy. By accumulating control over key markets, companies can set higher prices, lower service quality, and limit consumer choice. Moreover, less competition may limit innovation because dominant players feel less pressure to improve their products or services.

The impact of these practices goes beyond economics. For workers, greater consolidation could mean fewer job opportunities and lower wages as large companies exert more control over the labor market. Meanwhile, consumers face higher costs and fewer choices. Smaller companies find it more difficult to compete, which can lead to reduced entrepreneurship and diversity in the market.

The RFI also refers to another government initiative examining transactions in the healthcare market made by private equity companies. This parallel study aims to understand how such transactions could increase consolidation, increase profits, and threaten patient care and worker safety.

The FTC and the Department of Justice are calling for input from a broad range of stakeholders, including consumers, workers, businesses, advocacy groups, industry associations and elected officials. The agency’s goal is to collect comprehensive data to better understand and address issues arising from serial takeovers.

Ultimately, this investigation is a significant step towards ensuring transparent and competitive markets. This signals a determined effort by federal agencies to protect the public from the adverse effects of uncontrolled corporate consolidations. As agencies collect and analyze input, the findings are likely to influence future regulatory actions aimed at promoting fair competition and preventing market abuses.

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