USA – ILLINOIS Trends and Developments Contributed by: Craig C. Martin and Matt Basil, Willkie Farr & Gallagher LLP
be interpreted as designed for the sole purpose of forwarding consumer welfare” through lower prices or higher quantities. (Robert Bork, The Antitrust Paradox 71 (1978); see also Hovenkamp, supra at 45 (noting certain aspects of the” the 2010 Horizontal Merger Guidelines [are] more consistent with the concerns of current merger case law” than the 2023 Guidelines).) In Amazon’s Antitrust Paradox, a seminal work of the Neo-Brandeisian movement, then-future Biden Administration FTC Chair Lina Khan rejects that exclu - sive emphasis upon price and quantity in favour of a “much thicker conception of ‘consumer welfare’” conscious of a “host of political economic ends,” focusing on market structure and the competitive process, rather than just its outcomes. (See Ama - zon’s Antitrust Paradox, supra at 720–21.) That same attention to structure and competition appears in the 2023 Guidelines. To illustrate: the 2010 Horizontal Merger Guidelines presumed illegality of 5-to-4 hori - zontal mergers (mergers between competitors which reduce the number of competitors in the market from five firms of roughly equal size to four firms), whereas the 2023 Guidelines presume illegality in 7-to-6 merg - ers, reflecting a greater emphasis on preventing “ the concentration of economic power in the hands of a few... by keeping a large[r] number of small[er] com - petitors in business” than prior iterations. The Biden Administration’s concern about private equity appears in its policies Concern for a market’s structure naturally lends itself to an interest in its participants. Under the Biden Administration, however, that interest led to unease about the role and conduct of private equity in the marketplace. From the administration’s outset, former Assistant Attorney General Jonathan Kantor, then head of the DOJ Antitrust Division, viewed policing buyout groups as “an extremely important part of [the Biden admin - istration’s] enforcement program, “arguing the “busi - ness model” to “roll up an industry and essentially cash out” is “often very much at odds with the law and very much at odds with the competition we’re trying to protect.” Similarly, Chair Khan argued that “[b]y consolidating power gradually and incrementally through a series of smaller deals, [private equity] firms
have sometimes sidestepped antitrust review. In the aggregate, these roll-up plays can eliminate mean - ingful competition and allow new owners to jack up prices, degrade quality, and neutralize rivals without competitive checks,” and called for greater enforce - ment. Informed by those concerns, the Biden Administration sought to mitigate them. When announcing a review of the pre-existing merger guidelines, then-Chair Khan “spotlight[ed]” three topics. The first? Examin - ing whether the existing guidelines were “adequately attentive to the range of business strategies and incen - tives that might drive acquisitions, including roll-up plays by private equity firms.” To combat anticompeti - tive roll-ups, the FTC also identified “a series of merg - ers, acquisitions, or joint ventures that tend to bring about the harms that the antitrust laws were designed to prevent, but individually may not have violated the antitrust laws” as a potential unfair method of com - petition under Section 5 of the FTC Act. (Fed. Trade Comm’n, Policy Statement Regarding the Scope of Unfair Methods of Competition Under Section 5 of the Federal Trade Commission Act (10 November 2022).) Moreover, in June 2023, days before the DOJ and FTC would post a draft of the 2023 Guidelines, the Agencies proposed changes to the pre-merger notification form, associated instructions, and the pre- merger notification rules implementing the HSR Act. The proposed HSR changes also required acquirers to describe “all strategic rationales for the transaction” and provide information about certain officers and directors of the acquirer to avoid interlocking direc - torates, but, under certain circumstances, demand - ed that all parties report certain prior acquisitions to uncover serial acquisitions – all portending substantial consequences for private equity. (16 Code of Federal Regulations (CFR), Sections 801 and 803.) Between the regulatory changes and the draft guide - lines, it was clear that roll-up strategies (and private equity by extension) were no longer under the radar. Section 2.8 of the official 2023 Guidelines says so outright: the Agencies “may evaluate the series of acquisitions as part of an industry trend or evaluate the overall pattern or strategy of serial acquisitions by the acquiring firm.” Echoing then-Assistant Attorney General Kantor’s aforementioned concerns, the 2023
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