The focus of dealmaking and antitrust enforcement often centers on large transactions involving major companies. This is due to the Hart-Scott-Rodino Act, which mandates that antitrust agencies receive notice of significant deals valued at over $119.5 million. However, roll-up schemes, favored by private equity firms and other corporate entities, can be executed through a series of smaller acquisitions that individually fall below the reporting threshold for antitrust agencies.
A sequence of relatively small acquisitions can impact competition similarly to one large acquisition, enabling a firm to eliminate competition and gain substantial control over products and services without undergoing antitrust review. This issue is particularly concerning in sectors where competition primarily occurs at the local level, such as healthcare or retail.
Serial acquisitions that gradually eliminate small competitors can have serious repercussions for consumers, workers, and businesses. Once detected by antitrust agencies, action can be taken against firms employing this strategy. For example, the Federal Trade Commission (FTC) has challenged serial acquisitions in anesthesiology practices, veterinary clinics, and dialysis clinics. Similarly, the Department of Justice (DOJ) has contested acquisitions involving dairy processors.
There are increasing concerns about the rise of serial acquisition strategies among private equity firms, real estate investment trusts, and other corporate actors. Antitrust agencies are now seeking public assistance in identifying other sectors where these strategies may be occurring unnoticed.
Today, the FTC and DOJ released a "Request for Information for Public Comment on Corporate Consolidation Through Serial Acquisitions and Roll-Up Strategies." This request seeks information on serial acquisitions across various sectors of the U.S. economy including housing, defense, cybersecurity, distribution, agriculture, construction, and aftermarket/repair markets.
The agencies welcome input from consumers, workers, businesses, advocacy organizations, professional and trade associations; local, state and federal elected officials; academics; and other experts with knowledge of specific industries and the broader effects of serial acquisitions.
"Your comments will go a long way to helping us understand the ways that roll-up acquisition strategies may lead to consolidation," states the request. The aim is to gather insights into how these strategies might result in higher prices, lower quality or fewer choices for essential products or services.
