Welsh, Carson, Anderson & Stowe; Analysis of Agreement Containing Consent Order To Aid Public Comment, 9723-9728 [2025-02719]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 90, Number 31 (Tuesday, February 18, 2025)]
[Notices]
[Pages 9723-9728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-02719]


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FEDERAL TRADE COMMISSION

[File No. 201 0031]


Welsh, Carson, Anderson & Stowe; Analysis of Agreement Containing 
Consent Order To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement; request for comment.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of Federal law prohibiting unfair methods of competition. 
The attached Analysis of Proposed Consent Order to Aid Public Comment 
describes both the allegations in the complaint and the terms of the 
consent order--embodied in the consent agreement--that would settle 
these allegations.

DATES: Comments must be received on or before March 20, 2025.

ADDRESSES: Interested parties may file comments online or on paper by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Please write: ``Welsh Carson; 
File No. 201 0031'' on your comment and file your comment online at 
https://www.regulations.gov by following the instructions on the web-
based form. If you prefer to file your comment on paper, please mail 
your comment to the following address: Federal Trade Commission, Office 
of the Secretary, 600 Pennsylvania Avenue NW, Mail Stop H-144 (Annex 
A), Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Kara Monahan (202-326-2018), Health 
Care Division, Bureau of Competition, Federal Trade Commission, 400 7th 
Street SW, Washington, DC 20024.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule Sec.  2.34, 16 CFR 
2.34, notice is

[[Page 9724]]

hereby given that the above-captioned consent agreement containing a 
consent order to cease and desist, having been filed with and accepted, 
subject to final approval, by the Commission, has been placed on the 
public record for a period of 30 days. The following Analysis of 
Agreement Containing Consent Order to Aid Public Comment describes the 
terms of the consent agreement and the allegations in the complaint. An 
electronic copy of the full text of the consent agreement package can 
be obtained from the FTC website at this web address: https://www.ftc.gov/news-events/commission-actions.
    The public is invited to submit comments on this document. For the 
Commission to consider your comment, we must receive it on or before 
March 20, 2025. Write ``Welsh Carson; File No. 201 0031'' on your 
comment. Your comment--including your name and your State--will be 
placed on the public record of this proceeding, including, to the 
extent practicable, on the https://www.regulations.gov website.
    Because of the agency's heightened security screening, postal mail 
addressed to the Commission will be delayed. We strongly encourage you 
to submit your comments online through the https://www.regulations.gov 
website. If you prefer to file your comment on paper, write ``Welsh 
Carson; File No. 201 0031'' on your comment and on the envelope, and 
mail your comment by overnight service to: Federal Trade Commission, 
Office of the Secretary, 600 Pennsylvania Avenue NW, Mail Stop H-144 
(Annex A), Washington, DC 20580.
    Because your comment will be placed on the publicly accessible 
website at https://www.regulations.gov, you are solely responsible for 
making sure your comment does not include any sensitive or confidential 
information. In particular, your comment should not include sensitive 
personal information, such as your or anyone else's Social Security 
number; date of birth; driver's license number or other State 
identification number, or foreign country equivalent; passport number; 
financial account number; or credit or debit card number. You are also 
solely responsible for making sure your comment does not include 
sensitive health information, such as medical records or other 
individually identifiable health information. In addition, your comment 
should not include any ``trade secret or any commercial or financial 
information which . . . is privileged or confidential''--as provided by 
section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule Sec.  
4.10(a)(2), 16 CFR 4.10(a)(2)--including competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule Sec.  4.9(c). In 
particular, the written request for confidential treatment that 
accompanies the comment must include the factual and legal basis for 
the request and must identify the specific portions of the comment to 
be withheld from the public record. See FTC Rule Sec.  4.9(c). Your 
comment will be kept confidential only if the General Counsel grants 
your request in accordance with the law and the public interest. Once 
your comment has been posted on https://www.regulations.gov--as legally 
required by FTC Rule Sec.  4.9(b)--we cannot redact or remove your 
comment from that website, unless you submit a confidentiality request 
that meets the requirements for such treatment under FTC Rule Sec.  
4.9(c), and the General Counsel grants that request.
    Visit the FTC website at https://www.ftc.gov to read this document 
and the news release describing this matter. The FTC Act and other laws 
the Commission administers permit the collection of public comments to 
consider and use in this proceeding, as appropriate. The Commission 
will consider all timely and responsive public comments it receives on 
or before March 20, 2025. For information on the Commission's privacy 
policy, including routine uses permitted by the Privacy Act, see 
https://www.ftc.gov/site-information/privacy-policy.

Analysis of Agreement Containing Consent Order To Aid Public Comment

I. Introduction

    The Federal Trade Commission (``Commission'') has accepted for 
public comment, subject to final approval, an Agreement Containing 
Consent Order (``Consent Agreement'') from Welsh, Carson, Anderson & 
Stowe and its affiliates (collectively ``Welsh Carson'' or 
``Respondents''). The Consent Agreement settles charges that Welsh 
Carson violated section 5 of the Federal Trade Commission Act, 15 
U.S.C. 45, and section 7 of the Clayton Act, 15 U.S.C. 18, by 
conspiring to monopolize or controlling, directing, or encouraging the 
illegal consolidation of hospital-only anesthesia services in Texas.
    Welsh Carson is a private equity firm that invests in and manages a 
portfolio of companies in the healthcare and technology sectors. It 
runs this business using various corporate entities that share 
personnel and resources, including WCAS Management Corporation, WCAS 
Management, LLC, WCAS Management LP, WCAS XII Associates, LLC, and 
funds such as WCAS XI. All these various corporate entities act 
together as a single company, and are referred to as ``Welsh Carson'' 
or ``the Firm.''
    In 2012, Welsh Carson created U.S. Anesthesia Partners, Inc. 
(``USAP'') to consolidate anesthesia practice groups in Texas. Working 
together with Welsh Carson, USAP acquired at least 15 competitors in 
Houston, Dallas, Austin, and across Texas, significantly raising the 
prices each charged for anesthesia services. Through 2017, Welsh Carson 
maintained control of USAP through its majority ownership stake or 
because it held the voting rights of almost all of the other 
shareholders. Today, Welsh Carson remains USAP's single-largest 
shareholder and the most influential member of its board of directors.
    The purpose of the Consent Agreement is to protect the public from 
Welsh Carson's potential future anticompetitive conduct and deter 
others from engaging in similar anticompetitive conduct. Under the 
terms of the proposed Decision and Order (``Order''), Welsh Carson will 
limit its involvement with USAP and must notify--or in certain 
circumstances obtain approval from--the Commission prior to making 
acquisitions or investments in anesthesia and other hospital-based 
physician practices.
    The Consent Agreement has been placed on the public record for 30 
days for receipt of comments from interested persons. Comments received 
during this period will become part of the public record. After 30 
days, the Commission will review the comments received and decide 
whether it should withdraw, modify, or finalize the proposed Order. The 
purpose of this analysis is to facilitate public comment on the Consent 
Agreement and proposed Order to aid the Commission in determining 
whether it should make the proposed Order final. This analysis is not 
an official interpretation of the proposed Order and does not modify 
its terms.

II. The Complaint

    According to the complaint, Welsh Carson devised a scheme in 2012 
to consolidate the market for hospital-based anesthesia services. It 
planned to create a company, buy up a critical mass of anesthesia 
practices in key markets, and then leverage the resulting market power 
to raise prices to those that pay

[[Page 9725]]

for health care, including patients, employers, insurance companies, 
and others. Welsh Carson created USAP to be the vehicle for its 
anesthesia consolidation scheme, identified acquisition targets, 
conducted due diligence, provided or secured financing, and helped to 
develop the strategy to execute price increases with insurers. Under 
Welsh Carson's control, direction, and encouragement, USAP acquired 15 
competitors in Texas.
    With Welsh Carson's support, USAP controlled between 60-70 percent 
of the Houston and Dallas hospital-only anesthesia markets by 2020 and 
increased its rates with each of the major commercial insurers in 
Texas. Over time, these increases have cost Texas employers and 
insurers tens of millions of dollars. In addition to Texas, USAP 
maintains a presence in at least ten other States, including Florida, 
Colorado, Washington, Arizona, Indiana, Tennessee, Nevada, Maryland, 
Kansas, and Oklahoma.
    Welsh Carson has also invested in other hospital-based physician 
specialties, including emergency medicine, neonatology, and radiology. 
For example, U.S. Radiology Specialists was founded jointly by Welsh 
Carson and one of the nation's largest radiology groups, and today 
covers over 80 hospitals in more than a dozen States. Pediatrix, a 
neonatology practice, was a Welsh Carson portfolio company that 
acquired over 100 neonatology practice groups. The complaint alleges 
that Welsh Carson's history of investing in hospital-based practices 
supports a reasonable likelihood that Welsh Carson will engage in 
similar or related conduct in the future.
    The Complaint alleges monopolization and conspiracy to monopolize 
claims under section 5 of the FTC Act, as well as violations of section 
7 of the Clayton Act.

III. The Proposed Order

    The proposed Order seeks to limit Respondents' ongoing involvement 
in USAP and to prevent recurrence of the conduct alleged in the 
Complaint, including in other geographic areas and in other hospital-
based physician practices with competitive dynamics similar to 
hospital-only anesthesia services. To accomplish these goals, the 
proposed Order incorporates Respondents' unique structure into the 
proposed Order's definitions and operative provisions and as a result, 
the proposed Order consolidates ownership interests, voting rights, and 
board appointments across the various Respondents. For example, the 
definition of each non-fund Respondent aggregates control across WCAS 
Parties (excluding entities held by a fund) to determine whether any 
entity is part of the Respondent, and control over future investments 
(see Sections III and IV of the proposed Order) will be determined 
across all WCAS Parties.
    Section II of the proposed Order limits Respondents' ongoing 
ownership rights and entanglements with USAP. Paragraphs II.A and II.B 
freeze Respondents' current investment in USAP and reduce their board 
representation to a single seat--who cannot serve as chairman--thereby 
preventing Welsh Carson from retaking control over USAP and reducing 
Respondents' ability to benefit from USAP's monopoly position in Texas. 
To remove any unnecessary connections between Respondents and USAP, 
Paragraph II.C further requires Respondents, upon a written request 
from USAP, to terminate (without penalty) contracts under which 
Respondents provide services to USAP.
    To prevent recurrence of Respondents' alleged conduct in anesthesia 
markets, Section III of the proposed Order requires Respondents to 
obtain prior approval or provide the Commission notice before 
completing certain transactions. Such provisions alert the Commission 
about transactions before they occur, so that the Commission can 
attempt to stop future anticompetitive serial acquisitions in their 
incipiency. Prior approval and notice provisions can be particularly 
important for acquisitions that fall below HSR reporting thresholds, 
like many of those anticompetitive transactions alleged in the 
Complaint. Because Respondents have historically invested in anesthesia 
practices in multiple States, Section III extends nationwide. Paragraph 
III.A requires prior approval for specified transactions in which 
Respondents plan to acquire an ownership interest in an anesthesia 
practice, either through a Respondent itself or through an anesthesia 
business in which Respondents already have a controlling interest. 
Paragraph III.B applies when an anesthesia business in which 
Respondents have a non-controlling ownership interest (other than 
passive interest of less than ten percent) makes certain acquisitions, 
and requires Respondents to provide notice to the Commission.
    Given Welsh Carson's consolidation of other hospital-based 
practices, the proposed Order extends beyond anesthesia investments. 
Specifically, Section IV of the proposed Order requires Respondents to 
give the Commission advance notice and pause closing for 30 days for 
certain investments in other hospital-based physician groups. Section 
IV applies when Respondents invest directly in a relevant practice or 
through an entity in which Respondents have more than 50% of ownership, 
voting rights, or board appointments.
    For transactions covered by Sections III and IV, the proposed Order 
applies whether Respondents make the investment through an existing 
investment fund or an investment fund created in the future. Section V 
gives the Commission notice if any such future fund will be operated by 
a manager other than one of the Respondents. Section VI gives the 
Commission certain discovery rights with respect to its ongoing 
litigation against USAP in Federal court in Texas.
    Finally, Sections VII, VIII, and IX of the proposed Order include 
provisions designed to ensure the effectiveness of the relief, 
including: obtaining information from Respondents that they are 
complying with the Order; requiring Respondents to submit compliance 
reports; and requiring Respondents to maintain specific written 
communications.

    By direction of the Commission.
April J. Tabor,
Secretary.

Statement of Chair Lina M. Khan Joined by Commissioner Rebecca Kelly 
Slaughter and Commissioner Alvaro M. Bedoya

    In September 2023, the Federal Trade Commission filed suit against 
U.S. Anesthesia Partners, Inc. (``USAP'') and private equity firm 
Welsh, Carson, Anderson & Stowe (``Welsh Carson'') alleging that the 
two executed a multi-year anticompetitive scheme to consolidate 
anesthesiology practices in Texas, drive up the price of anesthesia 
services provided to Texas patients, and boost their own profits.\1\ 
The Commission today announces the issuance of a proposed consent order 
settling charges that Welsh Carson's conduct violated section 7 of the 
Clayton Act and section 5 of the FTC Act.\2\
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    \1\ Press Release, Fed. Trade Comm'n, FTC Challenges Private 
Equity Firm's Scheme to Suppress Competition in Anesthesiology 
Practices Across Texas (Sept. 21, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/09/ftc-challenges-private-equity-firms-scheme-suppress-competition-anesthesiology-practices-across.
    \2\ The settlement follows an initial September 2023 federal 
court complaint in which the Commission alleged that USAP and Welsh 
Carson, which created USAP in 2012, engaged in a roll-up scheme by 
systemically buying up nearly every large anesthesia practice in 
Texas to create a single dominant provider with the power to demand 
higher prices. In May 2024, the district court dismissed Welsh 
Carson from the FTC's federal challenge on procedural grounds, 
finding that the FTC lacked authority to bring the case against 
Welsh Carson in federal court because the complaint did not allege 
that Welsh Carson was currently violating the law, as required under 
section 13(b) of the FTC Act. Fed. Trade Comm'n v. U.S. Anesthesia 
Partners, Inc., et al., No. 4:23-cv-03560 (S.D. Tex. May 13, 2024), 
ECF No. 146.

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[[Page 9726]]

    Welsh Carson created USAP in 2012 after observing that 
anesthesiology in Texas was comprised of small practices competing 
against one another. This competition enabled insurers to negotiate 
prices for themselves, resulting in lower prices for Texan businesses 
and patients. According to the FTC's administrative complaint, Welsh 
Carson saw an opportunity to profit from eliminating this competition 
and consolidating these various practices into a dominant provider with 
the power to extract high prices.\3\ Following its creation, USAP 
acquired more than a dozen anesthesiology practices in Texas.\4\ The 
FTC alleges that as it bought each one, USAP raised the acquired 
group's rates to USAP's higher rates--resulting in a substantial mark-
up for the same doctors as before.\5\ This roll-up strategy has made 
USAP the dominant provider of anesthesia services in Texas and in many 
of the state's metropolitan areas, including Houston and Dallas.\6\ 
USAP's size and prices now dwarf those of its rivals. As of 2021, it 
was at least four times larger than the second-largest group in 
Houston; six times larger than the second-largest group in Dallas; and 
nearly seven times larger than the second-largest group in all of 
Texas. USAP is also one of the most expensive, with reimbursement rates 
that are significantly higher than the median rate of other 
anesthesia.\7\
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    \3\ Compl., In the Matter of Welsh, Carson, Anderson & Stowe, 
File No. 2010031 (Jan. 16, 2025), ]] 2, 13.
    \4\ See id. at ]] 14-21.
    \5\ Id. at ]] 4, 30.
    \6\ Id. at ]] 27-30.
    \7\ According to state regulators, Welsh Carson and USAP have 
employed a similar strategy in other areas of the country as well, 
including in the Denver, Colorado metropolitan statistical area 
(``MSA'') where USAP eventually grew to account for more than 70% of 
health plan reimbursements for surgical anesthesia. See Press 
Release, Office of the Attorney General Colorado Department of Law, 
Private equity-run U.S. Anesthesia Partners to end Colorado health 
care monopoly under agreement with Attorney General Phil Weiser 
(Feb. 27, 2024), https://coag.gov/press-releases/usap-health-care-monopoly-attorney-general-phil-weiser-2-27-2024/.
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    This was not a one-off strategy, but rather a tried-and-true 
playbook that Welsh Carson had already used to ``roll up'' independent 
physician groups across other health care markets. For example, after 
investing in neonatology provider Pediatrix Medical Group in 1998, 
Welsh Carson subsequently acquired over 100 neonatology practices,\8\ 
eventually priding itself on staffing one in four neonatal intensive 
care units in the country.\9\ In 2015, Welsh Carson bought out an Ohio-
based emergency medical staffing and management group to form US Acute 
Care Solutions and engaged in a similar roll up strategy in the 
emergency medicine market; by 2019, it had grown to serve six million 
patients at 220 sites in 20 states.\10\ When preparing to enter the 
radiology market in 2017, Welsh Carson explained that ``[g]iven our 
success to date with USAP and [in emergency medicine], we would like to 
. . . deploy[ ] a similar strategy to consolidate the market[.]'' \11\ 
Today, U.S. Radiology Specialists, which describes itself as ``founded 
jointly'' by Welsh Carson and ``one of the nation's largest'' radiology 
groups, covers over 80 hospitals in more than a dozen states.\12\
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    \8\ See Compl., Fed. Trade Comm'n v. U.S. Anesthesia Partners, 
Inc., et al., No. 4:23-cv-03560 (S.D. Tex. Sep. 21, 2023), at ]] 82-
83.
    \9\ Maureen Tkacik, Heads They `Cha-Ching!'; Tails They Take 
Away Your Malpractice Insurance, The Am. Prospect (Sep. 22, 2023), 
https://prospect.org/health/2023-09-22-private-equity-medical-rollups-malpractice-insurance/.
    \10\ Eileen Appelbaum & Rosemary Batt, Private Equity Buyouts in 
Healthcare: Who Wins, Who Loses?, Ctr. for Econ. and Pol'y Rsch., 
Working Paper No. 118 (Mar. 15, 2020), at 72, available at https://www.cepr.net/wp-content/uploads/2020/03/WP_118-Appelbaum-and-Batt.pdf.
    \11\ Compl., Fed. Trade Comm'n v. U.S. Anesthesia Partners, 
Inc., et al., No. 4:23-cv-03560 (S.D. Tex. Sep. 21, 2023), at ] 339.
    \12\ Id.
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    Nor is this strategy limited to Welsh Carson. Reporting suggests 
that markets across the economy have been rolled-up through serial 
acquisitions and other stealth acquisitions, from car washes to dry 
cleaners.\13\ The incremental rise of consolidation through successive, 
smaller acquisitions has, however, long been a top concern for 
legislators and enforcers alike--and especially so for the FTC.\14\ 
Indeed, it was the inability of the older Sherman Act to cope with 
``individually minute'' lessenings of competition that led to the 1914 
enactment of the Clayton Act.\15\ Congress sought to address these 
concerns again in 1950 through the Celler-Kefauver Act, which the 
Supreme Court observed was specifically intended to address ``the 
rising tide of economic concentration . . . in its incipiency to break 
this force at its outset and before it gathered momentum.'' \16\
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    \13\ See Miriam Gottfried, Private Equity Wants to Wash Your 
Car, Wall St. J. (Aug. 20, 2022), https://www.wsj.com/articles/private-equity-wants-to-wash-your-car-11660968031.
    \14\ See Brown Shoe Co. v. United States, 370 U.S. 294, 333-34 
(1962) (quoting Fed. Trade Comm'n, The Merger Movement: A Summary 
Report (1948)) (``Imminent monopoly may appear when one large 
[company] acquires another, but it is unlikely to be perceived in a 
small acquisition by a large enterprise. As a large [company] grows 
through a series of such small acquisitions, its accretions of power 
are individually so minute as to make it difficult to use the 
Sherman Act tests against them.'').
    \15\ In re Nat'l Tea Co., 69 F.T.C. 226 (1966).
    \16\ Brown Shoe, 370 U.S. at 317-18.
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    Much of the modern focus on serial acquisitions has concerned 
private equity firms' use of ``buy-and-build'' strategies, where a 
portfolio company buys a firm, often the market leader, and then 
``rolls-up'' smaller competitors using the private equity firm's money 
and acquisition expertise.\17\ Private equity firms have made serial 
acquisitions across markets--from nursing homes and apartment buildings 
to emergency medicine clinics and opioid treatment centers.\18\ But 
serial acquisition strategies are not just limited to private equity 
firms; they have also been used by large technology companies and other 
corporate actors to consolidate control over certain markets.\19\ By 
consolidating power gradually and incrementally through a series of 
smaller deals, firms have sometimes sidestepped antitrust review. In 
the aggregate, these roll-up plays can eliminate meaningful competition 
and allow new owners to jack up prices, degrade quality, and neutralize 
rivals without competitive checks.
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    \17\ See Statement of Comm'r Rohit Chopra Regarding Private 
Equity Roll-ups and the Hart-Scott Rodino Annual Report to Congress 
(July 8, 2020), https://www.ftc.gov/system/files/documents/public_statements/1577783/p110014hsrannualreportchoprastatement.pdf; 
Statement of Chair Lina M. Khan Joined by Comm'r Rebecca Kelly 
Slaughter and Comm'r Alvaro M. Bedoya In the Matter of JAB Consumer 
Fund/SAGE Veterinary Partners (Jun. 13, 2022), https://www.ftc.gov/legal-library/browse/cases-proceedings/public-statements/statement-chair-lina-m-khan-joined-commissioner-rebecca-kelly-slaughter-commissioner-alvaro-m-bedoya.
    \18\ See Remarks by Chair Lina M. Khan as Prepared for Delivery 
at the Private Capital, Public Impact Workshop on Private Equity in 
Healthcare (Mar. 5, 2024), https://www.ftc.gov/system/files/ftc_gov/pdf/2024.03.05-chair-khan-remarks-at-the-private-capital-public-impact-workshop-on-private-equity-in-healthcare.pdf; see also U.S. 
Dep't of Health and Human Services, HHS Consolidation in Health Care 
Markets RFI Response (Jan. 15, 2025), https://www.hhs.gov/sites/default/files/hhs-consolidation-health-care-markets-rfi-response-report.pdf.
    \19\ See Fed. Trade Comm'n, Non-HSR Reported Acquisitions by 
Select Technology Platforms, 2010-2019 (2021), https://www.ftc.gov/system/files/documents/reports/non-hsr-reported-acquisitions-select-technology-platforms-2010-2019-ftc-study/p201201technologyplatformstudy2021.pdf.
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    Antitrust enforcers have taken a series of steps to address these 
anticompetitive transactions and help ensure our tools keep pace with 
changes in how firms now do business. The FTC and DOJ jointly issued 
the 2023 Merger Guidelines, which recognize that ``[a]

[[Page 9727]]

firm that engages in an anticompetitive pattern or strategy of multiple 
acquisitions in the same or related business lines may violate Section 
7'' of the Clayton Act.\20\ The FTC also issued a policy statement 
clarifying the full scope of section 5 of the FTC Act, which explicitly 
identifies as a potential unfair method of competition ``a series of 
mergers, 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.'' \21\ More 
recently, the agencies finalized updates to the premerger notification 
forms that will require firms to disclose expanded information on 
business incentives and prior acquisitions, mitigating blind spots and 
allowing enforcers to spot roll-ups at their inception.\22\
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    \20\ U.S. Dep't of Justice & Fed. Trade Comm'n, Merger 
Guidelines at 23 (Dec. 18, 2023), https://www.ftc.gov/system/files/ftc_gov/pdf/2023_merger_guidelines_final_12.18.2023.pdf.
    \21\ Fed. Trade Comm'n, Policy Statement Regarding the Scope of 
Unfair Methods of Competition Under Section 5 of the Federal Trade 
Commission Act (Nov. 10, 2022), https://www.ftc.gov/system/files/ftc_gov/pdf/P221202Section5PolicyStatement.pdf.
    \22\ Press Release, Fed. Trade Comm'n, FTC Finalizes Changes to 
Premerger Notification Form (Oct. 10, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/10/ftc-finalizes-changes-premerger-notification-form.
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    In addition to updating its enforcement tools, the FTC has also 
partnered with colleagues across the federal government to share and 
solicit further helpful information from our sister agencies, market 
participants, and the broader public to ensure that illegal roll-ups do 
not evade antitrust scrutiny. For example, the FTC, DOJ, and the 
Department of Health and Human Services conducted a tri-agency public 
inquiry to examine the role of private equity and consolidation in 
health care,\23\ and have committed to exchange data and information to 
help identify potentially unlawful transactions that might otherwise 
sidestep review.\24\ The FTC and DOJ also jointly issued a request for 
information seeking information from the public to specifically help 
identify serial acquisitions and roll-up strategies throughout the 
economy that have led to consolidation that has harmed competition.\25\
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    \23\ Press Release, Fed. Trade Comm'n, Federal Trade Commission, 
the Department of Justice and the Department of Health and Human 
Services Launch Cross-Government Inquiry on Impact of Corporate 
Greed in Health Care (Mar. 5, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/03/federal-trade-commission-departmentjustice-department-health-human-services-launch-cross-government; Press Release, U.S. Dep't of Health and Human Services, 
HHS Releases Report on Consolidation and Private Equity (PE) in 
Health Care Markets (Jan. 15, 2025), https://www.hhs.gov/about/news/2025/01/15/hhs-releases-report-consolidation-private-equity-health-care-markets.html.
    \24\ Press Release, The White House, FACT SHEET: Biden-Harris 
Administration Announces New Actions to Lower Health Care and 
Prescription Drug Costs by Promoting Competition (Dec. 7, 2023), 
https://www.whitehouse.gov/briefing-room/statements-releases/2023/12/07/fact-sheet-biden-harris-administration-announces-new-actions-to-lower-health-care-and-prescription-drug-costs-by-promoting-competition/.
    \25\ Press Release, Fed. Trade Comm'n, FTC and DOJ Seek Info on 
Serial Acquisitions, Roll-Up Strategies Across U.S. Economy (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.
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    The Commission's proposed settlement with Welsh Carson builds upon 
these significant programmatic advances in addressing serial 
acquisitions, seeking to restore competition in the affected markets 
for anesthesiology services, and protecting competition in adjacent 
markets by better equipping the agency to detect future unlawful 
transactions. As part of the settlement, Welsh Carson has agreed to 
freeze its pro rata ownership of USAP at the current minority level and 
to not provide any new financing that would increase its pro rata 
ownership.\26\ Welsh Carson has also agreed to give up a seat on USAP's 
board of directors and limit its representation on USAP's board to a 
single non-Chair board seat.\27\ The settlement further prevents Welsh 
Carson from gaining management rights over USAP and allows USAP to 
terminate any contract under which Welsh Carson provides services to 
USAP immediately upon written notice.\28\ These provisions help to 
ensure that Welsh Carson can no longer exercise control over USAP's 
operations or its decision-making.
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    \26\ Decision and Order, at Sec.  II.A.
    \27\ Id. at Sec.  II.B.
    \28\ Id. at Sec. Sec.  II.B-C.
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    Critically, the proposed order includes nationwide prior approval 
and notice provisions which establish key safeguards against future 
dealmaking that may prove unlawful. The order requires Welsh Carson to 
obtain the FTC's prior approval for any acquisition of, or investment 
in, any anesthesia business. The proposed order also requires Welsh 
Carson-controlled portfolio companies to obtain prior approval before 
acquiring or investing in any anesthesia business that is in the same 
state or MSA as any other existing Welsh Carson anesthesia investment 
nationwide.\29\ Notably, the proposed relief establishes protections 
against potentially anticompetitive dealmaking in adjacent markets as 
well, requiring Welsh Carson to provide the FTC with written notice 
before acquiring or making a majority investment in any hospital-based 
physician practice in the same state or MSA as any existing Welsh 
Carson-controlled hospital-based physician practice investment 
nationwide.\30\
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    \29\ Id. at Sec.  III.
    \30\ Id. at Sec.  IV.
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    The proposed order is notable not just because of the scope of the 
contemplated relief, but also for its novel treatment of private equity 
defendants. Firms in the modern economy utilize a variety of corporate 
forms and structures to engage in commerce, and industry actors have 
become increasingly sophisticated at corporate organization and venture 
formation. Like other private equity firms, Welsh Carson uses a complex 
maze of related entities and funds to carry out its business. Indeed, 
the Commission's complaint in this matter identifies no fewer than 
seven different Welsh Carson affiliates as defendants, including two 
separate private equity funds. Thus, to ensure that Welsh Carson cannot 
evade the requirements outlined in the proposed relief, the order is 
drafted so that each of the provisions, including the nationwide prior 
approval and notice requirements, apply both to Welsh Carson's existing 
private equity funds as well as any investment vehicles, funds or 
otherwise, that the firm may form in the future. This establishes a 
valuable blueprint for future Commission orders involving financially 
sophisticated actors.
    Many thanks to the FTC's Health Care and Compliance teams for their 
diligent work on this matter. We will be collecting comments on our 
proposed order for 30 days and look forward to reviewing this public 
input.

Concurring Statement of Commissioner Andrew N. Ferguson, Joined by 
Commissioner Melissa Holyoak

    The Commission today issues an administrative complaint and accepts 
a proposed consent order with Welsh, Carson, Anderson & Stowe (``Welsh 
Carson'').\1\ The Complaint alleges that Welsh Carson, through its 
portfolio company U.S. Anesthesia Partners, acquired a series of 
anesthesia practices in the Houston and Dallas-Fort Worth metropolitan 
areas.\2\ The Complaint further alleges that these acquisitions gave 
Welsh Carson monopoly power over anesthesia services in the relevant 
markets, and it used that monopoly power to increase the prices for 
anesthesia services above competitive

[[Page 9728]]

levels.\3\ This inflicted real economic injury on Americans at their 
most vulnerable moments--when they needed medical intervention so 
substantial that anesthesia was required. That conduct, the Complaint 
alleges, violated section 2 of the Sherman Act and section 5 of the FTC 
Act,\4\ as well as section 7 of the Clayton Act.\5\
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    \1\ In re Welsh, Carson, Anderson & Stowe XI, L.P., Complaint 
(``Complaint'') & Decision and Order.
    \2\ Compl. ] 25.
    \3\ Id. ]] 1-4, 13-21, 27-31.
    \4\ Id. ]] 33-34, 37.
    \5\ Id. ] 35.
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    I concur in today's Commission action because it is a routine law-
enforcement matter embodying a traditional approach to competition 
law.\6\ A reader might reach a different conclusion given the agency's 
rhetoric in connection with the public announcement of this settlement. 
The press release and the Chair's statement both suggest that this case 
is extraordinary because it involves ``private equity'' and ``serial 
acquisitions,'' and hint at antipathy toward private equity.\7\
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    \6\ See Dissenting Statement of Comm'r Andrew N. Ferguson, 
Regarding the Telemarketing Sales Rule, Matter No. R411001 (Nov. 27, 
2024) (``The proper role of this lame-duck Commission is . . . to 
hold down the fort, conduct routine law enforcement, and provide for 
an orderly transition to the Trump Administration. I will vote 
against all new rules not required by statute, and any enforcement 
action that advances an unprecedented theory of liability until that 
transition is complete.'').
    \7\ Statement of Chair Lina M. Khan, Joined by Comm'rs Rebecca 
Kelly Slaughter and Alvaro Bedoya, In the Matter of Welsh, Carson, 
Anderson & Stowe, Matter No. 2010031 (Jan. 17, 2025); Press Release, 
FTC, FTC Secures Settlement with Private Equity Firm in Antitrust 
Roll-Up Scheme Case (Jan. 17, 2025).
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    I write to pierce through this breathless rhetoric to make clear 
that this case is an ordinary application of the most elementary 
antitrust principles. That Welsh Carson is a private equity firm is 
irrelevant; the antitrust analysis would be the same if Welsh Carson 
were, for example, an individual or institutional investor. Section 7 
prohibits mergers that may substantially lessen competition or tend to 
create a monopoly.\8\ In most of our section 7 cases, we are predicting 
the likely effects of a transaction before it takes place.\9\ Here, 
however, we did not have to predict anything. Welsh Carson made 
acquisitions. As alleged in the Complaint, those acquisitions 
demonstrably created monopoly power and Welsh Carson wielded that power 
to raise prices. That is exactly what section 7 prohibits anyone from 
doing. There is thus no reason for the Commission to single out private 
equity for special treatment.
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    \8\ 15 U.S.C. 18. Similarly, section 2 of the Sherman Act has 
long been understood to prohibit ``merging viable competitors to 
create a monopoly.'' Phillip E. Areeda & Herbert Hovenkamp, 
Antitrust Law, ] 701a (rev. ed. 2024); see also United States v. 
Grinnell, 384 U.S. 563, 576 (Sherman Act section 2 violation based 
in part on acquisitions of competitors in the central station 
service business including burglar alarm services, fire alarm 
services, and the like because ``[b]y those acquisitions it 
perfected the monopoly power to exclude competitors and fix 
prices.'').
    \9\ FTC v. H.J. Heinz Co., 246 F.3d 708, 713, 727 (D.C. Cir. 
2001) (preliminarily enjoining a proposed merger and explaining that 
``Congress has empowered the FTC, inter alia, to weed out those 
mergers whose effect `may be substantially to lessen competition' 
from those that enhance competition.'' (quoting H.R. Rep. No. 1142, 
at 18-19 (1914))); see also Concurring Statement of Comm'r Andrew N. 
Ferguson, Final Premerger Notification Form and the Hart-Scott-
Rodino Rules, Matter No. P239300, at 2 (Oct. 10, 2024) (describing 
Congress's intent to provide for premerger review with the 1976 
Hart-Scott-Rodino Act).
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    Similarly, the Chair's reference to the 2023 Merger Guidelines is a 
red herring. The Guidelines provide that ``[a] firm engages in an 
anticompetitive pattern or strategy of multiple acquisitions in the 
same or related business lines may violate Section 7.'' \10\ But 
section 7 does not prohibit anticompetitive ``pattern[s]'' or 
``strateg[ies].'' It prohibits ``acqui[sitions]'' ``the effect of 
[which] may be substantially to lessen competition or to tend to create 
a monopoly.'' \11\ That is what the Complaint accuses Welsh Carson of 
doing--making acquisitions that in fact tended to create a monopoly and 
injured vulnerable Americans. The public should disregard my Democratic 
colleagues' rather clumsy attempt to make a run-of-the-mill enforcement 
matter seem like an avant-garde application of novel provisions of the 
2023 Guidelines.\12\
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    \10\ U.S. Dep't of Justice & Fed. Trade Comm'n, Merger 
Guidelines, at 3, 23 (Dec. 18, 2023).
    \11\ 15 U.S.C. 18.
    \12\ The Chair's reference to the partisan 2022 section 5 Policy 
Statement for the proposition that serial acquisitions can present 
an incipient violation of the antitrust laws is equally unavailing. 
The Complaint charges section 2 and section 7 violations, which 
section 5 indisputably reaches even under the Democrats' own reading 
of section 5 jurisprudence. FTC, Policy Statement Regarding the 
Scope of Unfair Methods of Competition Under Section 5 of the 
Federal Trade Commission Act, at 12 (Nov. 10, 2022) (``examples of 
conduct that have been found to violate Section 5 include: Practices 
deemed to violate Sections 1 and 2 of the Sherman Act or the 
provisions of the Clayton Act, as amended (the antitrust laws)'').

[FR Doc. 2025-02719 Filed 2-14-25; 8:45 am]
BILLING CODE 6750-01-P