Federal Trade Commission (FTC) Chair Lina Khan has stressed the agency’s dedication to curbing monopolistic practices, with a specific emphasis on the healthcare industry. Speaking at the Oliver Wyman Health Summit in Chicago on Monday, Khan underscored the critical nature of healthcare, stating, “We all know health care is not like buying a toaster. It really can be life or death for people, and so that’s why this is a particular area of focus for us.”
Under Khan’s leadership, the FTC has been proactive in preventing undue industry consolidation that could pave the way for monopolistic behavior. Notably, the FTC scrutinized the acquisition of biotech Horizon Therapeutics (HZNP) by pharma giant Amgen (AMGN). Despite the challenge, the deal was approved and is slated for completion later this year. Similarly, the FTC withdrew its legal challenge to Microsoft’s (MSFT) acquisition of Activision Blizzard (ATVI).
Khan’s extensive analysis of acquisition activities over recent years revealed that major tech companies concluded numerous deals, each valued at less than $100 million, without reporting to the agency. These inconspicuous transactions often facilitate gradual market consolidation without triggering regulatory attention. Khan remarked, “We have, in certain instances, just seen blind spots. Where we’ve seen a whole set of deals that are below our radar, that are kind of slowly and incrementally consolidating a market, and then five years in, 10 years in, you have two players, three players that have come to dominate.”
In response to this trend, the FTC is ramping up efforts to collect comprehensive data on lower-value deals. The agency aims to glean insights that would enhance its understanding of acquirer activities.
Khan also addressed the concerning consolidation trends in the healthcare sector, where provider groups and hospitals are merging. Contrary to expectations, this consolidation has failed to yield lower prices or increased patient competition. “We think that some of the consolidation that we’ve seen across the board has had very negative effects. We’ve seen increased prices without any resulting improvements in quality or efficiency,” Khan stated.
To address this, the FTC is considering potential legislative actions within the healthcare industry. Khan seeks to rectify past assumptions that the market would naturally self-correct with minimal intervention. She cautioned that in today’s dynamic markets, such assumptions could lead to rapid monopolization. “Two decades on, we’re realizing that wasn’t just wrong but in some cases it was the opposite. Because of these network effects and these economies of scale, markets can be much more quick to tip, and that actually requires the government to be more vigilant and ensure that in layers where you can envision competition, that we’re actually acting vigorously to protect it,” Khan emphasized.
Anticipated resistance from corporations safeguarding their interests will undoubtedly test Khan’s proposed stringent regulations against monopolies. Her endeavors are poised to shape fair competition not only in the healthcare industry but across diverse sectors.
Source: Yahoo Finance