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In brief

The US District Court for the Southern District of Texas has granted a motion to dismiss the FTC’s lawsuit filed by private equity firm Welsh, Carson, Anderson & Stowe (WCAS), but denied the motion to dismiss filed by its minority-owned portfolio company, US Anesthesiology Partners, Inc. (USAP). The FTC alleged that WCAS and USAP developed and pursued an anticompetitive acquisition strategy to “roll-up” multiple Texas-based aesthesia practices in violation of federal antitrust law. The court granted WCAS’s motion to dismiss because it found that its minority, non-controlling stake in USAP was insufficient to support a violation of federal antitrust law. On the other hand, the court allowed the case to proceed against USAP based on the FTC’s allegations of ongoing violations, including serial acquisitions that constitute ongoing behavior.


Key takeaways 

  • This ruling is a major victory for private equity investors and a blow to the FTC’s enforcement efforts in this space. The court ruled that having a 23% equity stake in, and minority representation on the board of, an operating entity that allegedly engaged in activity that violates federal antitrust law cannot support a finding of liability for the private equity investor — even where the private equity investor helped to establish the operating entity and devised the acquisition strategy that allegedly violated antitrust law.
  • The case against USAP is proceeding and companies should carefully consider the risk of antitrust enforcement when pursuing any “roll-up” acquisition strategies. Despite the FTC’s loss in this case, the FTC will continue to prioritize enforcement against “roll-up” acquisition strategies, particularly in the healthcare sector. Only days after this decision, the FTC released an agenda for an upcoming meeting that clarified its intent to continue scrutinizing “roll-up” acquisitions.

In depth

In granting WCAS’s motion to dismiss, the court reasoned that the FTC has limited authority to bring cases against minority investors when it alleges potential and ongoing antitrust violations. The court held: “[t]he FTC has not cited a case in which a minority, noncontrolling investor — however hands-on — is liable … because the company it partially owned made anticompetitive acquisitions.”1 The court continued: such a holding “would expand the FTC’s reach further than any court has yet seen fit; it would also expand liability to minority investors whose subsidiaries reduce competition. This Court will not adopt this novel interpretation.”2 The court also highlighted that “the FTC does not cite any authority for the proposition that receiving profits from an entity that may be violating antitrust laws is itself a violation of antitrust laws.”3  Finally, the court found that WCAS’s continued minority position and its ability to increase its investment in, and/or retake control of, USAP could not establish that WCAS is “about to violate” federal antitrust law. The court succinctly stated: “[t]he mere capacity to do something does not meet the requirement that the thing is likely to recur.”4 

The court did, however, allow the case to proceed against USAP, denying its motion to dismiss, because USAP’s “acquisitions constitute ongoing activity and plausibly contribute to the monopoly power and unfair competition that the FTC’s complaint alleges.”

Despite WCAS’s victory, it is possible for the FTC to initiate an administrative action against WCAS, or it could pursue similar allegations against minority private equity investors in different federal jurisdictions where it may find a more receptive jurist. Nevertheless, “roll-up” acquisition strategies remain an enforcement priority for the FTC. In fact, on 16 May 2024, FTC Chair Lina Khan released an agenda for an FTC Open Meeting on 23 May 2024.5  One of the agenda topics includes, “Staff Presentation on Roll-Up RFI” described as “a presentation on the Commission’s Request for Information for public comment on corporate consolidation through serial acquisitions and roll-up strategies.”6 Further, on 23 May 2024, the FTC and DOJ issued a Request for Information seeking public comment about serial acquisitions and roll-up strategies.7 The FTC’s Director of the Bureau of Competition, Henry Liu, published a blog post the same day highlighting the agency’s focus on roll-up strategies.  He stated that “[s]erial acquisitions that eliminate small competitors over time can have serious consequences for consumers, workers, and businesses [and noted that o]nce the antitrust agencies detect that a firm is relying on a strategy of serial acquisitions to buy up small competitors, they can take action.”8 Private equity firms and other companies considering or pursuing a “roll-up” strategy should remain diligent and seek advice from counsel to minimize antitrust risks. 


1 Order, FTC v. US Anesthesia Partners, Inc., et al., No. 4:23-CV-03560 (S.D. Tex. May 13, 2024) (ECF No. 146).

Id. at 12-13.

Id. at 9.

Id. at 15.

See Press Release, Federal Trade Commission, FTC Announces Tentative Agenda for May 23 Open Commission Meeting (May 16, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/05/ftc-announces-tentative-agenda-may-23-open-commission-meeting.

6 Id.

7 Press Release, FTC and DOJ Seek Info on Serial Acquisitions, Roll-Up Strategies Across U.S. Economy, FTC (May 23, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/05/ftc-doj-seek-info-serial-acquisitions-roll-strategies-across-us-economy?utm_source=govdelivery.

8 Henry Liu, Slow the Roll-Up: Help Shine a Light on Serial Acquisitions, FTC.GOV COMPETITION MATTERS BLOG (May 23, 2024), https://www.ftc.gov/enforcement/competition-matters/2024/05/slow-roll-help-shine-light-serial-acquisitions?utm_source=govdelivery.

Author

Brian Burke is a partner in Baker McKenzie's Washington, DC office. He draws on over 20 years of experience to counsel clients on all federal antitrust issues. He assists clients in successfully navigating the merger clearance process before the US as well as international antitrust authorities. Brian also has extensive experience advising clients on civil and criminal governmental antitrust investigations, commercial antitrust litigation, antitrust compliance programs, risk assessments, and pricing and distribution policies. Brian holds multiple leadership positions in the Firm. He is a member of the Steering Committee for the Firm's North American Antitrust Practice Group, as well of the Global Antitrust and Competition Taskforces for Healthcare, Energy Mining and Infrastructure, and Consumer Goods Industries. He also serves as the co-head of the Firm's Merger-Control Task Force.

Author

William Roppolo is the Head of Litigation and Government Enforcement for Baker McKenzie's New York and Miami offices and serves as Co-Chair of the North America Trial Team. He is also Lead Partner of the Miami office. William has successfully tried commercial and criminal cases throughout the United States, including matters involving alleged antitrust, fraud and money laundering violations. He began his legal career investigating financial crimes with the United States Customs Service. William is a former President of the Federal Bar Association's South Florida Chapter and served on the national Federal Bar Association's Professional Ethics Committee. He has published many articles on topics including anti-corruption, PFAS litigation, Federal Trade Commission enforcement trends, and trial strategies.

Author

Mark Weiss is a partner in the Firm's North America Antitrust & Competition Practice Group. He is an experienced litigator and counselor with proficiency in antitrust litigation, class-action defense, federal multi-district litigation, and no-poach defense. Mark has vigorously and tirelessly represented clients in a variety of industries including manufacturing, mining, high-tech industries, banking, defense contracting, aerospace, and energy.
As an experienced antitrust counsel, Mark has also conducted cartel investigations and internal compliance reviews, and regularly provides antitrust advice on a broad range of non-litigation matters, including sales and distribution advice, antitrust compliance, competitive merger analysis, and merger clearance strategy.
Prior to joining Baker McKenzie, Mark worked at another global law firm with a focus on class-action antitrust litigation, including defending a global electronics manufacturer from price-fixing and collusion claims, defending a major global financial institution from antitrust collusion and boycott claims, and defending a large government defense contractor from claims alleging illegal no-poach agreements.

Author

Ashley Eickhof is a senior associate in the Firm's North America Antitrust & Competition Practice Group. Ashley is an experienced litigator and has tried criminal cases in federal court.
Prior to joining Baker McKenzie, Ashley worked at another large international law firm in the Antitrust and Competition Practice Group. Before that, Ashley began her career as a federal prosecutor for the Antitrust Division of the US Department of Justice.

Author

Andrea Rivers is a member of the Firm's North America Antitrust & Competition Practice Group, based in Washington, DC. Andrea previously worked as a Legal Intern for the Federal Trade Commission, Bureau of Competition, Anticompetitive Practices Division as well as a Legal Intern to the Antitrust, Commercial & Administrative Law Subcommittee of the U.S. House Committee on the Judiciary and the Montgomery County State's Attorney's Office. Prior to joining Baker McKenzie, Andrea was an associate at a specialist antitrust law firm.

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