Large mergers and acquisitions often capture media attention and draw the scrutiny of regulatory bodies like the Federal Trade Commission (FTC). However, the FTC is not always notified about every deal, especially when it involves smaller transactions below a certain dollar threshold. This discrepancy has raised concerns, particularly in markets like dialysis and medical devices, where incremental consolidation can lead to dominance by a few key players.
During a fireside chat at the Oliver Wyman Health Innovation Summit 2023 in Chicago, Lina Khan, Chair of the FTC, acknowledged these challenges and emphasized that they are “top of mind” for the agency. In an effort to address these blind spots, the FTC proposed changes to the Hart-Scott-Rodino Form (HSR Form) in June, which is a premerger notification form. The proposed revisions seek to gather additional information from companies, such as the rationale behind their deal, projected revenue streams, and details on prior acquisitions.
Khan cited a report conducted by the FTC a couple of years ago, which examined the acquisitions made by the top five tech companies that flew under the agency’s radar. Surprisingly, there were approximately 800 deals that went unnoticed, highlighting the need to identify and eliminate blind spots. Recognizing the challenge, Congress is also considering potential legislation to address this issue.
Beyond the problem of smaller deals, Khan discussed other areas the FTC is prioritizing. One such area is the investigation of pharmacy benefit managers (PBMs) and their practices, which have raised concerns from patients and pharmacies alike. The FTC aims to investigate whether the relationship between PBMs and drug manufacturers is affecting Americans’ access to medicines and potentially squeezing pharmacies.
Additionally, the FTC recently proposed a rule to eliminate non-compete clauses in employment contracts. This rule received over 20,000 comments, with a significant number coming from healthcare workers. The FTC is taking these comments into account to ensure fair competition and protect employees’ rights.
Considering consumer protection, the FTC is actively addressing issues related to data privacy. Specifically, the agency is concerned about the potential misuse of sensitive health data collected by health apps, where companies may monetize such data through targeted advertising. To safeguard people’s privacy, the FTC has taken enforcement actions to hold companies accountable for their use of sensitive health information.
The FTC acknowledges the challenges posed by smaller deals that fall below its notification radar. Efforts are underway to enhance transparency and regulatory oversight through proposed changes to the HSR Form. Alongside this, the agency is tackling various issues in the healthcare industry, such as investigating PBMs, eliminating non-compete clauses, and safeguarding consumer data privacy. By addressing these challenges head-on, the FTC strives to ensure fair competition, protect consumers, and promote a dynamic and innovative marketplace.
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