FTC and DOJ Launch Inquiry Into Serial Acquisitions’ Impact on Competition

Mergers and Acquisitions© utah778 from Getty Images / Canva

WASHINGTON, D.C. — The Federal Trade Commission (FTC) and the Justice Department’s (DOJ) Antitrust Division have initiated a public inquiry to examine how serial acquisitions and roll-up strategies are affecting competition across various sectors of the economy.

The agencies issued a Request for Information (RFI) to gather insights from the public on corporate consolidation strategies. These strategies often involve a company expanding its dominance by purchasing several smaller firms within the same or related industries. This practice can lead to significant market control without triggering federal antitrust oversight, as many of these deals go unreported.

Corporate entities, including private equity firms, frequently engage in such acquisitions across diverse markets. This unchecked consolidation can harm competition, leading to higher prices, reduced quality, and stifled innovation, impacting consumers, workers, and entire industries.

“Firms can use serial acquisitions to roll up markets, consolidate power, and undermine fair competition, all while jacking up prices and degrading quality,” said FTC 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.”

Assistant Attorney General Jonathan Kanter of the DOJ’s Antitrust Division emphasized the negative impacts of these practices. “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,” he said. “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 on serial acquisitions across all U.S. sectors, including housing, defense, cybersecurity, distribution, agriculture, construction, and professional services. Comments from the public will inform the agencies’ enforcement priorities and future actions.

Examining the Impact of Corporate Consolidations

This inquiry comes at a crucial time when the role of private equity and corporate consolidations is under intense scrutiny. The focus on serial acquisitions reflects growing concerns that unchecked consolidation may be hurting the economy. By amassing control over key markets, companies can set higher prices, diminish service quality, and limit choices for consumers. Furthermore, less competition can curtail innovation, as dominant players face fewer pressures to improve their products or services.

The impact of these practices extends beyond economics. For workers, increased consolidation can mean fewer job opportunities and lower wages, as large firms exert more control over the labor market. Consumers, meanwhile, face higher costs and fewer choices. Smaller businesses find it harder to compete, potentially leading to reduced entrepreneurship and diversity in the marketplace.

The RFI also parallels another government initiative examining healthcare market transactions by private equity firms. This parallel inquiry aims to understand how such deals might increase consolidation, elevate profits, and threaten patient care and worker safety.

The FTC and DOJ are calling on a wide range of stakeholders to contribute, including consumers, workers, businesses, advocacy groups, trade associations, and elected officials. The agencies aim to gather comprehensive data to better understand and tackle the issues arising from serial acquisitions.

Ultimately, this inquiry marks a significant step toward ensuring transparent and competitive markets. It signals a robust effort by federal agencies to protect the public from the adverse effects of unchecked corporate consolidations. As the agencies collect and analyze input, the findings will likely shape future regulatory actions designed to promote fair competition and prevent market abuses.

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