Private Equity Buyouts are Part of the Competitive Process in the Market for Corporate Control: Global Antitrust Institute Comment on the DOJ-FTC-HHS Request for Information on Consolidation in Health Care

9 Pages Posted: 7 Jun 2024

See all articles by Alexander Raskovich

Alexander Raskovich

George Mason University - Antonin Scalia Law School, Faculty

Douglas H. Ginsburg

U.S. Court of Appeals for the District of Columbia Circuit; George Mason University - Antonin Scalia Law School

Abbott Lipsky

George Mason University - Antonin Scalia Law School

Dario da Silva Oliveira Neto

Global Antitrust Institute

John M. Yun

George Mason University - Antonin Scalia Law School

Date Written: June 03, 2024

Abstract

We focus on aspects of the Agencies' request for information (RFI) that are unrelated to competition issues. The RFI’s motivating idea seems to be that an increase in profits post-acquisition implies consumer harm. Thus, a private equity leveraged buyout, by sharpening a target firm’s profit-seeking, tends to harm consumers. This view is misguided. Competition is not a zero-sum game and profits do not necessarily reflect antitrust harm. On the contrary, increased profits more commonly flow from a firm’s improved ability to address consumer interests, thereby winning business from rivals. Private equity funds often seek to acquire underperforming firms, reorganize them to improve their performance, and resell them at a premium reflective of that improved performance. None of this is a proper concern of the antitrust agencies unless the acquired firm’s improved performance flows from a lessening of competition in a relevant antitrust market. If the antitrust agencies were to hinder acquisitions by private equity buyers despite the absence of likely anticompetitive effects, the Agencies would unwittingly lessen competition in the market for corporate control and thereby hinder potential improvements in competition in downstream product markets.

Keywords: private equity, leveraged buyouts, takeovers, corporate greed

JEL Classification: K21, D23, G34, L21

Suggested Citation

Raskovich, Alexander and Ginsburg, Douglas H. and Lipsky, Abbott and da Silva Oliveira Neto, Dario and Yun, John M., Private Equity Buyouts are Part of the Competitive Process in the Market for Corporate Control: Global Antitrust Institute Comment on the DOJ-FTC-HHS Request for Information on Consolidation in Health Care (June 03, 2024). George Mason Law & Economics Research Paper No. 24-13, Available at SSRN: https://ssrn.com/abstract=4856263 or http://dx.doi.org/10.2139/ssrn.4856263

Alexander Raskovich (Contact Author)

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

Douglas H. Ginsburg

U.S. Court of Appeals for the District of Columbia Circuit ( email )

333 Constitution Ave NW
Room 5523
Washington, DC 20001
United States

George Mason University - Antonin Scalia Law School ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

Abbott Lipsky

George Mason University - Antonin Scalia Law School ( email )

Dario Da Silva Oliveira Neto

Global Antitrust Institute ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

HOME PAGE: http://https://gai.gmu.edu/dario-oliveira-neto/

John M. Yun

George Mason University - Antonin Scalia Law School ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

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