Help shine a light on serial takeovers

Author: Henry Liu (Federal Trade Commission)

Discussions about dealmaking and antitrust enforcement typically focus on large transactions involving large companies. That’s because each year antitrust agencies are notified of significant transactions – currently worth more than $119.5 million – under the Hart-Scott-Rodino Act. However, roll-up programs, often used by private equity firms and other corporate entities, can be implemented through a series of smaller acquisitions that individually fall below the reporting threshold. Collectively, these smaller acquisitions can impact competition as much as a single large transaction, enabling a company to eliminate competition and gain significant control over products and services without antitrust scrutiny. This issue is of particular concern in sectors where competition is largely local, such as healthcare and retail.

Serial takeovers that gradually eliminate small competitors can have serious consequences for consumers, workers and businesses. When antitrust agencies believe that a company is using a strategy of serial acquisitions to absorb small competitors, they can intervene. For example, the FTC has challenged serial takeovers of anesthesia offices, veterinary clinics, and dialysis clinics, while the Department of Justice has taken action against takeovers in the dairy industry. Despite these efforts, there is growing concern about the rise of serial takeover strategies, particularly among private equity firms, real estate investment funds and other corporate entities. Antitrust agencies are now seeking public assistance in identifying other sectors where these strategies can be quietly implemented…

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