Private Equity Transactions and Antitrust: Some General Considerations and a Guide to Practical Problems

In this article for Antitrust Politics, author Timo Angerbauer explores the antitrust issues that can arise in private equity transactions, noting that the structure of private equity ownership can create merger control considerations that differ from those involving strategic acquirers. A key issue is that regulators generally focus on the sponsor or investment manager rather than individual funds when assessing turnover and jurisdictional thresholds. As a result, the turnover of controlled portfolio companies across multiple funds may need to be aggregated.

The author emphasizes that control, rather than simply majority ownership, is central to EU merger control. Minority investments can still confer control through veto rights or governance arrangements that allow an investor to exercise decisive influence. Co-investment structures can likewise result in joint control and trigger filing obligations, while countries such as Austria and Germany may require notification even for certain minority investments that do not confer control.

For the substantive antitrust assessment, regulators may consider the sponsor’s entire portfolio when identifying horizontal overlaps or customer and supplier relationships with the target, even where those businesses are held through separate funds. The author therefore recommends conducting an early, comprehensive review of the sponsor’s portfolio. While this can broaden the scope of the analysis, most private equity transactions have limited competitive overlaps and can often benefit from simplified or streamlined clearance.

Finally, the author notes that predictable regulatory clearance can give private equity buyers an advantage over strategic bidders in auctions, particularly where strategic buyers face greater substantive scrutiny. Private equity firms may also have greater flexibility in conducting antitrust-compliant due diligence through clean teams. Overall, the author concludes that private equity transactions require careful attention to control, turnover attribution, and portfolio-wide competitive relationships, but that early analysis can help firms identify and manage these risks efficiently…

CONTINUE READING…