The Federal Trade Commission (FTC) has taken action on the $5.2 billion cash-and-stock deal between private equity firm Quantum Energy Partners and natural gas producer EQT Corporation due to antitrust concerns. The announcement highlights the significant competition between Quantum and EQT in the Appalachian Basin, which is recognized as the U.S.'s premier natural gas-producing region.
According to a recent press release from October 10, 2023, the FTC has finalized a consent order to address the antitrust issues surrounding the deal. The order prevents entanglements and the exchange of confidential, competitively sensitive information between Quantum and EQT.
The intended acquisition would have made Quantum a major stakeholder in EQT and secured them a place on EQT's board. However, the FTC has expressed concerns that such a move could infringe upon antitrust guidelines and disrupt healthy competition in the sector.
In response to these concerns, the FTC's order includes several mandates. Quantum is now prohibited from obtaining a board position at EQT to prevent the potential establishment of an 'interlocking directorate', where a member of one company simultaneously holds a significant role in a competitor firm. Additionally, Quantum will have to divest its EQT shares and dissolve an existing joint venture that is perceived as anticompetitive.
To ensure compliance with the order, a specific monitor will be appointed to oversee Quantum's actions. Any future attempts by Quantum to acquire more EQT shares will require prior approval from the Commission. This intervention by the FTC is particularly significant as it is their first enforcement under Section 8 of the Clayton Act in the past 40 years.
After completing the review process and considering public input, the Commission unanimously approved the order with a 3-0 vote. The FTC's action aims to protect competition in the natural gas sector and prevent any potential anticompetitive effects of the Quantum and EQT deal.
