At the end of September, the Federal Trade Commission sued a private equity firm, Welsh, Carson, Anderson & Stowe, and U.S. Anesthesia Partners, Inc. (USAP), an anesthesia service provider in Texas, alleging that USAP and Welsh Carson drove up prices through an anticompetitive scheme to consolidate Texas anesthesiology practices.

USAP was created in 2012, at which point Welsh Carson owned a majority stake in the company. Since then, the FTC alleges that USAP and Welsh Carson deployed a three-part plan to monopolize Texas' anesthesiology market by (1) serially and systematically purchasing nearly all of the large practices in the state to create a single provider with enough market power to demand higher prices; (2) engaging in price-setting agreements with the remaining independent practices; and (3) reaching an agreement with a significant competitor to keep it out of USAP's territory.

The roll-up strategy resulted in USAP acquiring over a dozen anesthesiology practices in Texas over the last decade, which had the cumulative effect of making it the "dominant" service provider in the state and opened the door to the FTC's monopolization claims.

The complaint is a clear signal from the FTC that they view roll-up strategies, often utilized by private equity firms, with significant skepticism. Indeed, FTC Chair Lina Khan stated that the FTC "will continue to scrutinize and challenge serial acquisitions, roll-ups, and other stealth consolidation schemes that unlawfully undermine fair competition and harm the American public." The FTC's stance adds another potential front for private equity firms facing antitrust scrutiny, as they have already been targets in recent multidistrict cases brought by private plaintiffs. It is crucial to consult antitrust counsel regarding any acquisition strategies moving forward so that competitive concerns can be adequately addressed.