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Increased scrutiny of PE particularly on roll-up strategies

Under the FTC’s order, JAB must obtain the Commission’s prior notice provision and also a broad prior approval provision. That is a risk if the PE firms have a roll-up strategy, because it then requires future notification on acquisitions in the same space. This puts the firms at a disadvantage in a competitive auction setting.

Ownership at the firm level

The FTC and DOJ will look at how a firm has invested in these types of businesses. And, as a result, they’re going to look at that behavior as a whole and presume the firm will be what they deem to be anti-competitive.

Challenges for sector-focused fund

Healthcare is a concern not only with respect to antitrust enforcement, but also with respect to the False Claims Act and other types of regulatory enforcement. As PE firms are looking at these types of businesses, they need to know this is on every regulator’s radar. There’s also a real focus on industries directly impacting consumers – such as agriculture and transportation.

Preparing for enhanced scrutiny

Questions and analysis around competition law need to be undertaken at the beginning of the investment thesis, long before a firm is ever in an auction. Due diligence must be done ahead of time.

Risks of reaching out to regulators ahead of a deal

PE firms could potentially be subjecting themselves to a lengthy review with no obvious end in sight, and timing is of the essence on any deal. In addition, firms cannot be in a position to show sellers they pose this risk as a buyer.

Effect on dealmaking activity

In the intermediate term, it is going to be chilling in certain strategies and certain industries. Longer term, it is not known yet what’s going to be enforced.

Firms’ top priorities when it comes to antitrust issues

PE firms must be cognizant that they are under scrutiny globally, and they will need to pay the same attention to various companies that operate in industries that are under scrutiny. They’ve got to be more active with legislative and regulatory engagement and behave more like large corporates. PE firms should also be more discerning or creative in the transaction agreement and what they are agreeing to with respect to regulatory clearance. In addition, implementing and adhering to robust HSR compliance programs is imperative.

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Michael Fieweger represents private equity and venture capital funds, institutions, family offices and hedge funds and strategic acquirers in their formation and global acquisition and investment activities. Michael has a background in corporate finance, having previously served as a commercial lending officer with a division of JP Morgan Chase in Chicago. He is the chairman of the Firm's Global Private Equity Practice Group.


John Fedele is a member of Baker McKenzie's antitrust practice and is located in its Washington, DC office. While he has a broad range of antitrust experience, he most frequently represents clients before the Antitrust Division of the US Department of Justice (DOJ) and the Federal Trade Commission (FTC) in investigations of proposed mergers and acquisitions, and routinely analyzes and manages filing obligations under the Hart-Scott-Rodino (HSR) Act and foreign competition regimes. John is a member of the Washington D.C. office’s Diversity Advisory Committee, serves as a contact in the firm’s PointONE program designed to allow employees to raise workplace concerns in a safe space, and maintains an active pro bono practice. He also is a member of Baker McKenzie’s Global Merger Control Task Force.

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