Dive Brief:
- The Federal Trade Commission announced on Thursday that it fielded 3,152 merger and acquisition proposals across industries during 2022 — the second-highest tally over the past decade.
- Regulators and the Department of Justice asked for more information on less than 2% of the proposals and filed 50 merger enforcement actions. The agencies challenged at least six healthcare deals.
- As proposed merger activity ticks up, FTC Chair Linda Khan said the watchdog agency is struggling to keep up oversight.
Dive Insight:
The FTC increased oversight into mergers and acquisitions in 2022, reporting its highest level of enforcement activity in over 20 years in its annual report for the fiscal year ended Sept. 30, 2022.
In healthcare, the FTC filed suits to block mergers and acquisitions proposed by health systems, providers and medical groups.
The agency blocked three proposed health system transactions, including suits against for-profit giant HCA Healthcare, New Jersey-based RWJBarnabas Health System, and Rhode Island’s largest health systems Lifespan and Care New England.
The DOJ also sued insurer UnitedHealth Group in February 2022 to block its $13 billion acquisition of health IT company Change Healthcare, alleging the deal would offer the payer insight into “very competitively sensitive” data from other insurers. However, the DOJ lost its suit and the deal closed in October 2022.
Still, requests for additional information and suits aiming to block transactions hit only a fraction of proposed mergers, the report said. In many cases, the decision not to investigate a proposal comes down to resource constraints, Khan said.
Under the the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the FTC has thirty days to assess whether proposed transactions warrant further review. However, since the passing of the HSR Act, the volume and complexity of transactions has grown, the agency said.
“These timelines were set in an era where lawmakers expected the agencies would receive around 150 merger notifications per year — rather than 150 notifications per month, as the agencies now routinely receive,” Khan said.
She called for a “modernization” of the Hart-Scott-Rodino premerger program — a policy her office first proposed in June — to allow the agency more time to review proposed transactions.
The 2022 report follows guidelines released by regulators this week that could make it more difficult for healthcare deals to close moving forward.
The guidelines address vertical and cross-market deals that have been historically difficult to challenge, as well as private equity-backed “roll-ups” in which firms acquire and merge multiple small businesses into one larger company.
The rules are predicted to give regulators more oversight into healthcare deals broadly.
