Large mergers and acquisitions gain attention, both in the media and with the Federal Trade Commission (FTC). But the FTC doesn’t get pinged about every deal, particularly when it comes to smaller deals, said Lina Khan, chair of the FTC, on Monday. Specifically, the dollar threshold for a deal has to be above $100-110 million for the FTC to get notified.
This can lead to problems in some markets, such as the dialysis or medical device market.
“We have in certain instances just seen blind spots where we’ve seen a whole set of deals that are below our radar that are kind of slowly and incrementally consolidating a market and then five years in, 10 years in, you have two or three players that have come to dominate,” Khan said during a fireside chat at the Oliver Wyman Health Innovation Summit 2023 held Monday in Chicago.
These challenges are “top of mind” for the FTC, Khan added. In June, the agency proposed changes to the Hart-Scott-Rodino Form (HSR Form), which is a premerger notification form. The changes would include requiring companies to provide details about the rationale of their deal, their projected revenue streams and previous acquisitions.
“This is the form that companies fill out when they’re seeking to propose a deal that is above the threshold. That form would — in the proposed version we put out — actually seek information about prior deals, including ones that were below the radar, because I think we similarly are worried about some of the gaps,” Khan said.
She also noted a report the FTC did a couple of years ago that examined the acquisitions that were done below the agency’s radar in the tech space.
“There were somewhere between 800 deals by the top five tech companies that were just totally out of sight for us,” Khan stated. “That was an instructive experience for us as well in terms of eliminating some of the blind spots. So it’s definitely a challenge and we sometimes do retrospective studies or other types of research to try to understand where might some of those blind spots be. It’s also something that Congress is looking at in terms of potential legislation.”
In addition to discussing the problem of smaller deals, Khan touched on other areas the FTC is focusing on. This includes investigating the practices of pharmacy benefit managers (PBMs).
“We’ve been hearing a lot from patients as well as from pharmacies about how some of the practices between PBMs and drug manufacturers may be distorting what medicines Americans can get access to, maybe squeezing pharmacies,” Khan said.
The agency also recently proposed a rule that would eliminate non-compete clauses in employment contracts. The FTC received more than 20,000 comments on the proposed rule, many of which came from healthcare workers, Khan said.
Another priority for the FTC is consumer protection, such as issues around data privacy.
“One concern that the FTC has is that some of the data that’s being collected by these health apps is not fully protecting people’s privacy,” Khan said. “So some of the enforcement actions that we’ve brought have been designed to make sure that if companies are collecting people’s sensitive health data for the purpose of providing them health services, they’re not then quietly turning around and monetizing that data through providing ads.”
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