The Biden-era Federal Trade Commission (FTC) and Department of Justice, Antitrust Division (DOJ) have made no secret of their intention to closely scrutinize the involvement of private equity investors in mergers and acquisitions. This increased scrutiny—paired with general skepticism of private equity incentives—comes amidst ever-increasing private equity activity. This article suggests that the US antitrust agencies’ recent concerns regarding private equity mark a significant divergence from long-standing agency policy and do not account for empirical evidence highlighting the procompetitive benefits of private equity investment.
We start out by summarizing agency leaders’ recent statements that suggest that private equity investment is harmful to competition and show that these statements conflict with previous agency policy and leadership opinion. We then highlight empirical economic evidence suggesting that a blanket negative view of private equity in the competition context is misplaced. First, we summarize a selection of empirical studies of private equity investment on business productivity, quality, resiliency, and innovation, as well as an empirical study on asset divestitures, all of which suggest procompetitive effects. Second, we highlight that allegedly “problematic” roll-up acquisitions and interlocking directorates are by no means unique to—or inherently more problematic in—private equity deals.