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Commissioner Chopra Releases Statement on Private Equity Roll-Ups with FTC/DOJ HSR Annual Report

On Wednesday, an FTC Commissioner used the occasion of a routine report to Congress to send a warning shot to private equity firms, especially those rolling up health care providers. Commissioner Rohit Chopra, an advisor to Senator Elizabeth Warren before he joined the Commission in May 2018, released this statement focusing particular scrutiny on private equity (PE) firms and the practice of acquiring physician groups, especially emergency medicine, anesthesiology, and other services that generate “surprise” out of network charges for otherwise insured patients.

Commissioner Chopra’s statement scrutinized the practice of PE roll-ups, a strategy where a private equity firm acquires multiple companies in a particular market sector, which can ultimately lead to the firm controlling market power, thereby reducing competition. These types of transactions present a risk of flying under the radar because each individual transaction may not be reportable under the HSR Act.1 Therefore, the private equity firm may slowly over time increase its market share in a particular market while never attracting the FTC or DOJ’s attention until the acquired firms are integrated into the PE company and an antitrust remedy becomes difficult. Of course, completing a transaction under the reporting threshold does not exempt a deal from post-closing antitrust enforcement, and Commissioner Chopra would advocate for greater post-closing scrutiny of such transactions. While the topic of PE roll-ups, generally, are of concern to Commissioner Chopra, he discussed particular concern relating to the health care sector. Chopra noted that the median deal size of leveraged buyouts by private equity firms in the health care sector is estimated to be between $60-$70 (below HSR reporting thresholds), but may ultimately lead to outsized market power. Commissioner Chopra warned of the collateral consequences of PE roll-ups in the health care sector, including the practice of “body brokering” in the treatment of opioid dependency, where treatment centers provide financial incentives to intermediaries who find patients in “sober homes,” and earn kickbacks by steering those patients to treatment centers at great cost to their insurers. Ultimately, Chopra called on the FTC to halt acquisition strategies resulting in higher costs to consumers and reduction in quality of care, and urged the Commission to more aggressively utilize its power under Section 6(b) of the FTC Act to study consummated transactions.

Commissioner Chopra’s statement was a continuation of his long-held scrutiny of private equity roll-ups, having previously issued a 2018 letter to Congress regarding roll-ups in the opioid treatment sector. As M&A activity continues, and particularly in the health care sector where hospitals are facing financial strain from COVID-19, parties must be aware of the risks of undertaking a roll-up strategy involving multiple non-HSR-reportable transactions. Parties must ensure such acquisition strategies properly weigh antitrust enforcement risks, including the potential for an uptick in consummated merger challenges.

1 Under the HSR Act, parties must notify the FTC and DOJ for transactions in excess of $94 million. Transactions under this $94 million threshold do not require a pre-closing notification to the agencies.

©1994-2020 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume X, Number 192


About this Author

Joseph M. Miller Antitrust Attorney Mintz, Levin, Cohn, Ferris, Glovsky & Popeo

Joe is a seasoned antitrust attorney and Co-chair of the firm’s Antitrust Practice. He has nearly 30 years of experience that spans roles in private practice, as a general counsel, and with federal antitrust enforcement agencies. He focuses his practice on providing strategic transactional advice and representing clients in government investigations and merger reviews. Joe primarily works with clients in the health care industry.

His work includes representing health care companies before the FTC and DOJ in merger reviews, counseling them on the antitrust aspects of transactions,...

Robert G. Kidwell Member Mintz DC Antitrust Health Care Enforcement & Investigations Communications Complex Commercial Litigation

Rob’s Washington, DC-based competition and trade regulation practice involves counseling on the regulatory implications of business strategies, regulatory matters, policymaking, and litigation. He defends clients in complex litigation and in merger and regulatory reviews by the US Department of Justice, the Federal Trade Commission, the Committee on Foreign Investment in the US, and the Federal Communications Commission. Rob’s clients include media and telecommunications companies, health systems and providers, national retailers, trade associations, and life sciences and technology companies.

Rob counsels a broad range of clients on business and investment strategy, M&A, litigation, and regulatory matters. He specializes in clearly explaining strategic risks and their relative values in order to help senior executives make informed decisions. Rob provides advice to clients from across the country and around the world, in high-profile matters including:

  • Strategic business planning and risk management 

  • Antitrust issues in mergers and acquisitions / second requests

  • Complex litigation (class action and otherwise)

  • Regulatory issues arising from foreign investments in U.S. businesses

  • Federal and state regulatory investigations

  • Policy advocacy and notice-and-comment rulemaking 

  • Appellate review of agency action

  • Trade association counseling

  • Privacy and data security

  • Unfair/deceptive conduct and false advertising

Rob represents clients in numerous markets, including:

  • Media content and distribution
  • Wireless communications
  • Health care providers and services
  • Life sciences
  • Technology
  • Retail & Consumer Products
  • Trade associations and non-profits

He has written and spoken widely on litigation risk management and cost containment, developments in the law, and on issues faced by businesses when they interact with federal and state enforcers and administrative agencies.

Rob is an active supporter of the firm’s pro bono program, providing representation to numerous indigent clients before the Social Security Administration and in local family and domestic relations courts. He has provided corporate and business planning advice to the National Network to End Domestic Violence and other non-profit clients. He is also an active supporter of the firm’s mentoring and sponsorship program.

Prior to his career in the law, Rob was an on-air radio personality and station production director in Lexington, KY.

Shawn Skolky, Mintz Levin Law Firm, Washington DC, Corporate and Litigation Law Attorney

Shawn advises on many aspects of antitrust and competition law, including antitrust counseling, merger review, and private antitrust litigation, including class actions. His consumer product safety practice focuses on helping companies seeking representation on product safety reporting obligations, recalls, regulatory compliance, product safety investigations, and enforcement matters involving the Consumer Product Safety Act (CPSA) and other federal and state product safety laws.