Antitrust Enforcers Intensify Scrutiny of Private Equity Deals

Over the last several years, private equity firms have faced an increasingly aggressive antitrust enforcement environment, both in the U.S. and abroad.  This increased scrutiny has involved more than just skepticism regarding private equity’s suitability as a divestiture buyer — the U.S. Department of Justice, Federal Trade Commission and antitrust agencies in Europe are also closely examining private equity acquisition strategies as a whole, general investment incentives, potential filing violations and board interlocks.  Antitrust regulators may, however, ultimately have difficulty proving that private equity business models actually result in less competition, as the very business models currently under the microscope, in practice, often result in faster growth, greater innovation and enhanced competitiveness.  The bottom line is that, with the right approach, private equity firms can continue to pursue their investment and acquisition strategies despite greater agency scrutiny.

By Giorgio Motta, Kenneth B. Schwartz, David M. Goldblatt & Michael B. Singer^[1]

I. INTRODUCTION

For the last several years, across two U.S. presidential administrations and amidst increased focus in the European Union and UK, private equity (“PE”) firms have faced a rising tide of aggressive antitrust enforcement rhetoric. In the U.S., the wave of increased scrutiny on PE began in earnest with then-FTC Commissioner Rohit Chopra’s statements in 2018 on the