By The Federal Trade Commission
The Federal Trade Commission and the Justice Department’s (DOJ) Antitrust Division jointly launched a public inquiry to identify serial acquisitions and roll-up strategies throughout the economy that have led to consolidation that has harmed competition.
In a joint Request for Information, the agencies are seeking information from the public on serial acquisitions and roll-up strategies, which are corporate consolidation strategies that occur when a company becomes larger—and potentially dominant—by buying several smaller firms in the same or related business sectors or industries.
Corporate actors, including private equity firms, engage in these types of acquisitions across a wide array of markets and industries. Often, businesses do not have to report these deals to the federal antitrust agencies, allowing firms to amass significant control over key products, services, or labor markets without government scrutiny. These types of transactions can harm competition to the detriment of consumers, workers, and innovation across an entire industry or business sector.
“Firms can use serial acquisitions to roll up markets, consolidate power, and undermine fair competition, all while jacking up prices and degrading quality,” said Chair Lina M. Khan. “As the FTC scrutinizes these stealth consolidation schemes, we invite the public to submit information about where serial acquisitions have occurred and their effects.”
“When companies use serial acquisitions and other roll-up strategies to consolidate industries while evading antitrust scrutiny, they deprive the American people of the benefits of competition,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “Public input about where these acquisitions have occurred and how they have impacted competition will help us identify and pursue harmful conduct.”
The RFI seeks information from the public on serial acquisitions in all sectors and industries in the U.S. economy, which includes but is not limited to housing, defense, cybersecurity, distribution businesses, agriculture, construction, aftermarket/repair, and professional services markets. Comments submitted in response to this RFI will inform the agencies’ enforcement priorities and future actions.
The FTC and DOJ are seeking input from a wide range of stakeholders including consumers, workers, businesses, advocacy organizations, professional and trade associations, local, state, and federal elected officials, academics, and others.
This RFI complements a parallel government inquiry that seeks to understand how certain health care market transactions by private equity firms and other corporations may increase consolidation and generate profits while threatening patients’ health, workers’ safety, quality of care, and affordable health care for patients and taxpayers.
The DOJ and FTC’s latest RFI builds on the agencies’ efforts to ensure federal antitrust enforcement tools keep pace with changes in how firms do business. The agencies have proposed amending the premerger notification forms to require firms to disclose more information about each party’s prior acquisition history. In addition, the FTC and DOJ’s 2023 Merger Guidelines recognize that serial acquisitions have the potential to violate the antitrust laws. The FTC’s Section 5 policy statement also makes clear that serial mergers, acquisitions or joint ventures can be anticompetitive.
The public will have 60 days to submit comments at Regulations.gov, no later than July 22, 2024. Once submitted, comments will be posted to Regulations.gov.
“Industry roll-ups can offer many unique benefits to business sellers. In particular, business sellers can benefit from a second bite at the apple if they’re willing to take rollover equity.”
-Shruti Gurudanti, Rose Law Group partner and director of corporate transactions
