The DOJ and FTC Turn Their Attention to “Roll-Up” Acquisitions, Looking for Anticompetitive Transactions

In a December 2023 statement, the White House detailed its intention to encourage antitrust enforcers to scrutinize anticompetitive acquisitions and anticompetitive practices in health care.

Specifically, the statement directed the US Department of Justice (DOJ) and Federal Trade Commission (FTC) to turn their attention to “roll-up” acquisitions, a practice where a business makes a sequence of relatively minor acquisitions that can result in market consolidation. Cumulatively, these acquisitions could potentially breach antitrust laws, but each individual acquisition falls below the size criteria for pre-acquisition reporting to antitrust enforcement agencies. This makes it difficult for government agencies to detect potentially anticompetitive transactions before their completion.

In response, the DOJ, and the FTC have announced their intention to collaborate on data sharing to the greatest extent possible. The aim is to help antitrust enforcers identify potentially anticompetitive transactions that may not typically qualify for antitrust enforcement reviews.

This new enforcement strategy was exemplified when the FTC filed a case targeting US Anesthesia Partners, Inc. (USAP) and its private equity investor Welsh, Carson, Anderson & Stowe (WCAS) for “roll-up” acquisitions alleging multiple antitrust violations.

In its complaint, the FTC alleged:

  • WCAS and USAP pursued an aggressive consolidation strategy in the Texas healthcare market, specifically in anesthesia services.
  • The strategy involved a “roll-up” where USAP bought nearly every large anesthesia practice in Texas, involving over a dozen practices, 1,000 doctors, and 750 nurses.
  • These acquisitions led to significant price increases, with USAP raising the acquired group’s prices to its own higher rates.
  • USAP also maintained price-setting arrangements with other independent anesthesia groups, charging its own high prices for services provided by those groups.
  • USAP and WCAS entered a market allocation agreement with another large anesthesia services provider.
  • As a result of these tactics, USAP has become the dominant provider of anesthesia services in Texas, with rates double the median rate of other providers.

The FTC alleges claims under the FTC Act and the Clayton Act, accusing USAP and WCAS of engaging in illegal monopolization, unlawful acquisitions, conspiring to monopolize, using unfair competition methods, and unlawfully restraining trade. The FTC seeks equitable relief to remedy the effects of USAP and WCAS’s alleged anticompetitive behavior and to prevent such behavior from recurring in the future.

This lawsuit serves as a warning, signaling that the FTC’s gaze has shifted towards the healthcare industry, with “roll-up” acquisitions squarely in its crosshairs.


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