Private equity could face more scrutiny as FTC turns up the dial on merger reviews
The Federal Trade Commission wants to increase scrutiny of merger deals in the U.S., including seeking greater insight into the involvement of private equity.
Alongside the Department of Justice, the agency is aiming to revise the premerger forms companies must fill out ahead of any deal-making. Key proposals would include requiring companies to provide projected revenue streams, internal documents describing market conditions, and the structure of entities involved “such as private equity investments.”
“The proposed changes to the [Hart-Scott-Rodino Act] Form and instructions would enable the agencies to more effectively and efficiently screen transactions for potential competition issues within the initial waiting period, which is typically 30 days,” the FTC and DOJ said in a June 27 announcement about the proposed changes. “This initial competition review is critical for the agencies to identify transactions that require an in-depth investigation.”
During such an analysis, regulators would deduce whether the transaction might violate antitrust laws, seeking to block the deal to protect the American public. The FTC also is proposing that forms would ask for the reasons behind the transaction, details on previous acquisitions, and any relevant corporate relationships or supply agreements.
FTC Chair Lina M. Khan and colleagues further explained the reasons for the changes in a separate statement. She noted that “much has changed in the 45 years since the HSR Act was passed.” In previous times, the agency scrutinized the largest 150 mergers annually. But now, it often receives that many filings in a single month, as deal volume has “soared.”
“Transactions are increasingly complex, in both deal structure and potential competitive impact,” Khan noted. “Investment vehicles have also changed, alongside major transformations in how firms do business. The HSR form, meanwhile, has largely stayed the same. Against the backdrop of these vast changes, the information currently collected by the HSR form is insufficient for our teams to determine, in the initial 30 days, whether a proposed deal may violate the antitrust laws.”
Public comments on the proposal are due within 60 days. Further information can be found in this FAQ from the agency.
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.