ABA Section of Antitrust Law Publishes Matthew Schmitten Analysis of Private Equity Divestiture Buyers

Akin Gump antitrust associate Matthew Schmitten has written the article “The Competitive Significance of Private Equity Divestiture Buyers,” which was published by the American Bar Association Section of Antitrust Law’s The Civil Practice & Procedure Committee’s Young Lawyers Advisory Panel: Perspectives in Antitrust. The article looks at whether competition is harmed by allowing private equity funds “to purchase assets being divested to remedy an otherwise anticompetitive merger.”

Schmitten takes the view of Federal Trade Commission Chairman Joseph Simons who, he writes, “has rejected the suggestion that PE funds warrant any categorical exclusion as candidates.” Instead, Schmitten observes that PE funds “do not systematically engage in conduct that might harm competition, namely crippling target businesses with debt and failing to make desirable long-term investments” and are “effective equity owners who increase the efficiency and competitiveness of their portfolio companies.”

For those not convinced, Schmitten writes, there are many other risks that remain. A strategic acquisition by a firm that operates in the same market, he points out, “necessarily presents the risks that its acquisition of the divested assets will lead to increased concentration and hence unilateral and coordinated price effects.” Public buyers, on the other hand, “present their own issues,” as does a transaction completed by a merger with another company.