Pandemic Puppies and Private Equity
One of the perhaps unexpected consequences of the pandemic is the dramatic increase in pet ownership. Beginning in 2019, but continuing through the pandemic, private equity firm JAB undertook a series of acquisitions of specialty and emergency veterinary clinics—each of which was met by an FTC consent order. As Julie Carlson explains in an article for Competition Policy International, while the DOJ’s recently revised merger remedies guide suggests that private equity buyers may be preferred to strategic buyers of divested assets in consent agreements, the enforcement rhetoric at both the DOJ and the FTC around private equity acquisitions has since become considerably negative.
Private equity is a business model innovation that can allow firms to achieve productivity improvements that are not attainable through other forms of corporate organization. In addition to increased scrutiny of private equity, the FTC has also reintroduced prior approval provisions into merger consent agreements—a pernicious combination that risks the productivity gains private equity brings to small firms in highly fragmented industries such as veterinary services. The recent concerns antitrust enforcers have raised about private equity—that it creates market power, facilitates unfair methods of competition, and undermines the competitive viability of acquired firms—are largely unfounded.
