As part of a flurry of activity in anticipation of the imminent change in administration, the Federal Trade Commission announced a unanimous approval of a consent order settling its enforcement action against Welsh Carson, the private equity backer of U.S. Anesthesia Partners ("USAP"). Outgoing FTC leadership heralded the settlement as novel enforcement of the new Merger Guidelines and a win against private equity, whereas potential future FTC Chair, Commissioner Andrew Ferguson, characterized the result as a straightforward application of well-established antitrust law.
Welsh Carson had been accused of engaging in anticompetitive acquisitions of anesthesia practices through its portfolio company. Initially, the FTC sued both Welsh Carson and USAP in federal court, but after Welsh Carson was dismissed on procedural grounds, the FTC threatened the private equity firm with an administrative complaint under Section 5 of the FTC Act on grounds that by serially acquiring previously independent anesthesia practices, Welsh Carson harmed competition for anesthesia services. According to the FTC, by "rolling up" independent practices, Welsh Carson was able to increase the prices charged by each practice to match the highest rate that any of the practices garnered, thus harming consumers.
The consent order issued today settles the threatened Section 5 enforcement action. As part of the settlement, Welsh Carson has agreed to freeze its pro-rata share in USAP and to limit its presence on USAP's board to one non-chair seat. Further, Welsh Carson is now required to obtain prior approval of any deal involving anesthesia practices nationwide, and must provide 30 days' notice of acquisition of any hospital-based physician practices, regardless of specialty.
Though the consent order was unanimously approved 5-0, the Commissioners nevertheless disagreed as to the impact of the consent order. Outgoing Chair Lina Khan, joined by fellow democrats Alvaro Bedoya and Rebecca Kelly Slaughter, heralded the consent order as an example of the future of antitrust enforcement as it targets private equity and the "serial" acquisitions undertaken by Welsh Carson. Commissioner Ferguson, who has been announced as President-Elect Trump's the next FTC Chair, joined by fellow Republican Melissa Holyoak, described the consent order as a straightforward application of existing antitrust law (in particular Section 7 of the Clayton Act), and not a novel application of Section 5 of the FTC Act or the new Merger Guidelines. The dissent further highlighted that its analysis would have applied to any owner and did not in any way target private equity.
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