THE INVISIBLE CONGLOMERATE: HOW BELOW-THRESHOLD SERIAL ACQUISITIONS BUILD PORTFOLIO POWER BEYOND COMPETITION LAW’S REACH

The article discusses the problem of sub-threshold serial acquisitions, during which firms obtain significant market power due to purchasing several small companies, which individually remain below the level of mergers notification thresholds. Even though competition laws mostly focus on reviewing major mergers, it is quite challenging for them to recognize an accumulative effect of many small transactions changing the market structure and weakening competition. The author demonstrates how firms conduct various schemes, such as horizontal roll-ups in highly fragmented industries and acquisitions of emerging rivals, which can potentially compete in the future. The fact that every single transaction undergoes separate analysis prevents regulators from seeing the trend in consolidation, resulting in a high level of market concentration after integration of acquisitions. Such problems manifest themselves in health services industry through acquisitions of physician practices and healthcare organizations, leading to greater concentration and higher costs. Another industry, which suffers from similar issues, is the digital economy, where tech companies buy up smaller startups, talents, intellectual property, and data. This article considers some potential solutions, such as the use of transaction thresholds, market inquiries, sector-specific regulation, and mandatory reporting of serial acquirers. The author’s conclusion is that successful regulation depends on switching from transaction-based regulation to programme-based regulation.