December 20, 2022
FTC and DOJ Signal Increased Scrutiny of Private
Equity Firms
Melissa Maxman, Ronald Wick, Alisa Lu
The United States antitrust agencies continue to increase the pressure on private equity firms.1 The
Federal Trade Commission (“FTC”) has amplified its position that rollups will get much harder looks, even
if they are below the threshold requi ring advance reporting under the Hart-Scot t-Rodino Act. Meanw hile,
the Antitrust Division of the Department of Justice (“DOJ”) recently announced interlocking directorate
investigations that result ed in the resignation of seven board members of var ious companies. These
developments underscore the need for private equity companies to take particul ar care in observing U.S.
competition laws.
FTC Unfair Competition Focuses on Rollups
A key element of FTC enforcement is Sectio n 5 of the FTC Act, which proscribes “[u]nfa ir methods of
competition in or affecting commerce. ”2 The FTC has taken the view that Sec tion 5 allows it to bring
enforcement actions against cond uct that may not violate other U.S. antitrus t laws. This expansive view of
“unfair methods of competition” i s particularly important to the current FTC , as one of the first acts of the
FTC under its current chair, Lina K han, was to withdraw a 2015 policy statement that it considered too
narrow. The Commission wrote, in its July 2021 withdrawal statement, that the 2015 statement
“contravenes the text, structure, and history of Section 5 and largel y writes the FTC’s standalone authority
out of existence” and “abrogates the C ommission’s congressionally mandated d uty.”3
The FTC’s new policy statement, whi ch was released last month, reflects its s ubstantially broadened view
of its enforcement power under Sectio n 5. It now contends that conduct may be actionab le (i) if it is
“coercive, exploitative, col lusive, abusive, deceptive, predat ory, or involv[ing] the use of economic power
of a similar nature, . . . [or] otherw ise restrictive or exclusionary, d epending on the circumstances” and (ii)
if it “tend[s] to negatively affect co mpetitive conditions,” whi ch determines whether the conduct may
generate negative consequences. 4 There is no requirement of actual harm.
1 See John Roberti et a l., FTC Consent Decrees Underscore Skepticism and Scrutiny of Private Equity Firms, COHEN &
GRESSER LLP (July 5, 2022 ), https://www.cohengresser.com/app/uploads/2022/07/FTC-Consent-Decrees-Underscore-
Skepticism-and-Scrutiny-of-Private-Equity-Firms.pdf.
2 15 U.S. Code § 45 .
3 FED. TRADE COMM’N, STATEMENT OF THE COM MISSION ON THE WITH DRAWAL OF TH E STATEMENT OF ENFORCEME NT PRINCIPLES
REGARDING “UNFAIR METHODS OF CO MPETITION” UNDER SECTION 5 OF THE FTC ACT (2021),
https://www.ftc.gov/system/files/documents/public_statements/1591706/p210100commnstmtwithdrawalsec5enforce
ment.pdf.
4 FED. TRADE COMM’N, POLICY STATEMENT REGARDI NG THE SCOPE OF UNFAIR METHODS OF COMPE TITION UNDER SECTION 5 OF TH E
FEDERAL TRADE COMMISSION ACT (2022),
https:// www.ftc.gov/system/files/ftc_gov/pdf/P221202Section5PolicyStatement.pdf.
