Private Equity-Backed Small Deals Set for DOJ Antitrust Scrutiny

The US Justice Department is looking beyond the large transactions reported to federal antitrust agencies to inform and bolster its antitrust cases in court, the Antitrust Division’s top litigator said.

Companies pursuing mergers and acquisitions valued at or above $119.5 million are subject to antitrust review by federal regulators, as mandated by the Hart-Scott-Rodino Act. But deals below that threshold also warrant significant attention because they offer insights into where an industry is headed and can shape how the DOJ frames its cases, including those involving private equity, said Hetal Doshi, who oversees the division’s litigation efforts.

“There is so much to be used and gleaned from non-reportable transactions and smaller-scale activities,” Doshi said at a Bloomberg roundtable on Wednesday. “It would be a mistake to really put an outsized level of attention to just HSR-reportable transactions, with leaving some of that on the table.”

Federal regulators are zeroing in on the role of private equity in health care, which involves deals that are often valued below the federal HSR threshold. The DOJ, along with the Federal Trade Commission and the Department of Health and Human Services, launched an inquiry in March into small acquisitions by private equity companies in the US health-care industry.

Reviewing smaller transactions provides a “broader and more complete, full picture” of an industry, including the impact of private equity investments, Doshi said.

States are increasingly enacting laws requiring hospitals and other health-care providers to notify them about smaller mergers or acquisitions, supporting the work of federal antitrust enforcers probing the health-care sector.

While health-care enforcement is a top priority for the antitrust agencies, sectors such as agriculture also necessitate a close look at smaller deals that aren’t automatically reported to federal regulators, Doshi said.