2025 Perspectives in Private Equity: Antitrust & Competition

The heightened focus on antitrust and competition issues that has defined dealmaking globally over the past few years looks set for readjustment since President Trump re-entered the White House.

Under the Biden administration, private equity (PE) firms saw the Federal Trade Commission (FTC) and the Department of Justice (DOJ) Antitrust Division broadening the scope of investigations to include a more novel array of antitrust theories, likely with the aim of chilling many potential combinations from making it out of the boardroom for fear of protracted scrutiny.

The new U.S. administration’s appointments of Andrew Ferguson as FTC chair, replacing Lina Khan, and nomination of Gail Slater to head of the DOJ’s antitrust division, replacing Jonathan Kanter, signals that it is taking antitrust enforcement seriously. Gail Slater has had a robust career as an antitrust enforcer, having investigated many mergers during her 10 years at the FTC. She also worked as an economic adviser to Vice President-elect JD Vance, who has said that antitrust officials should take a broader approach to antitrust enforcement, and who has praised the work of Lina Khan. Ferguson is an experienced antitrust enforcer and currently a Republican member of the FTC.

While the new Trump presidency clearly signals a shift in approach to antitrust enforcement, antitrust enforcement is unlikely to disappear for private equity firms in the U.S. and their transactions are likely to continue to face scrutiny outside the U.S. Certain industries will likely remain in the spotlight for more antitrust scrutiny in the U.S., including Big Tech and health care, which, since 2021, have been industries that benefited immensely from private equity investment. But the key takeaway for private equity as we enter 2025 is that, after years of aggressive and sometimes unpredictable antitrust enforcement in the U.S., the prognosis is sunnier, although not free of clouds.

Partial Ownership and Common Ownership Theories Are Unlikely To Be Areas of Meaningful Antitrust Enforcement

The Biden administration rewrote the analytical framework for merger enforcement in its 2023 Merger Guidelines, which included a new focus on minority ownership and partial acquisitions, both of which are acute concerns for private equity. It is unclear whether the Merger Guidelines will survive in their present form, but we expect that many of the theories housed in the Merger Guidelines are unlikely to form the basis of agency enforcement under the Trump administration while the agencies clarify their approach to merger enforcement, which would be welcome news for private equity.

“Roll-Ups” and “Serial” Acquisitions Are Unlikely To Be Inherently Problematic

During the Biden administration, the agencies expressed concerns over what it called ‘stealth roll-ups’ by PE, with enforcement focus driven by scrutiny of firms’ acquisition histories and incentives. It is common for private equity to focus investments in particular sectors and segments but the agencies expressed concern about these kinds of investments. We expect the inherent suspicion about these kinds of transactions to abate and replaced by a prioritization of more standard antitrust criteria.

The Trump Administration Will Likely Be More Willing To Settle Its Concerns and Be More Willing To Accept Divestitures Involving PE

Under the Biden administration, both agencies—especially the DOJ—were reluctant to resolve their concerns about the competitive aspects of transactions with negotiated settlements, a significant departure from the practices of the prior four administrations. Even when the Biden administration considered settlements, solutions involving private equity were met with categorical skepticism. We expect this to change. The Trump administration will likely allow more transactions to close with acceptable fixes, including the traditional remedy of divestitures. As part of this return, we expect the Trump administration to look far more favorably towards divestitures involving private equity buyers.

But the Revised HSR Form Increases the Ability To Identify Interlocking Directorates

Section 8 of the Clayton Act prohibits an individual from serving simultaneously as an officer or director on two competing corporations. For private equity firms, these regulations can pose significant challenges, particularly while managing a diverse portfolio of companies within similar industries. The Biden administration actively enforced the prohibitions on interlocking directorates and there may be a continued focus on PE in that regard, particularly if the new Hart-Scott-Rodino (HSR) rules and form go into effect, as scheduled.

The new HSR premerger notification rules are slated to go into effect in February 2025 and will require acquirers to identify officers and directors of certain entities within the acquirer that also serve as officers or directors at other companies. This update appears to be aimed at enabling the agencies to better detect violations of prohibited interlocking directorates and could result in more Section 8 enforcement.

While it is unclear whether the Trump administration will devote similar resources to investigate interlocking directorates, the new HSR form will improve its ability to detect Section violations should it choose to do so. Consequently, PE firms should consider implementing robust compliance protocols and exercise care in appointing directors to portfolio company boards.