Federal Judge Dismisses Private Equity Investor from FTC Lawsuit Over Alleged Anticompetitive Acts

Federal Judge Dismisses Private Equity Investor from FTC Lawsuit Alleging Anticompetitive Acts

In a recent development, a federal judge in Texas has dismissed a private equity investor from the Federal Trade Commission’s lawsuit, which claimed that the minority shareholder participated in a medical practice’s alleged anticompetitive acts. The FTC had argued that the investor, Welsh Carson, continued to hold illegally acquired practices, used leverage to raise prices, and shared profits with USAP.

However, Judge Hoyt ruled in favor of Welsh Carson, stating that there was no evidence to suggest that receiving profits from a company engaged in anticompetitive behavior constituted a violation of antitrust laws. Welsh Carson’s minority stake in USAP was the FTC’s main basis for the ongoing violation claim, but the judge questioned how owning a minority share could satisfy the statute.

Welsh Carson, which owns a 23% stock interest in USAP, expressed satisfaction with the dismissal of the FTC’s claim, calling it without factual or legal basis. Antitrust attorney Gerald Stein noted that the judge’s decision raises questions about how private equity firms will be treated in similar cases in the future.

While Welsh Carson was cleared of the allegations, the FTC’s case against USAP will proceed, allowing the agency to argue that roll-up strategies can be unlawfully anticompetitive. USAP has denied the allegations of wrongdoing. FTC Chair Lina Khan emphasized the agency’s commitment to challenging consolidation schemes that harm fair competition and the public.

The FTC declined to comment on the judge’s ruling, leaving the implications of the decision for future antitrust cases uncertain. The dismissal of Welsh Carson from the lawsuit highlights the complexities of determining liability for minority investors in cases involving anticompetitive practices.